US household wealth surges to $164 trillion, driven by gains in real estate, stock market

US household wealth rose to a record $163.8 trillion in the second quarter, driven by gains in real estate values ​​and a surge in the stock market, the Federal Reserve said.

The rise in household and nonprofit net worth, which reached $161 trillion at the end of the first quarter, was largely driven by a $1.8 trillion increase in the value of real estate holdings and a $700 billion gain in the value of stock holdings.

Meanwhile, household debt rose at an annual rate of 3.2%, the fastest rate since the third quarter of 2022. The report also showed that cash on hand fell slightly, with total balances in banks plus money market funds and foreign currency holdings at $18.44 trillion at the end of June, down from a record $18.51 trillion at the end of March.

The snapshot of household finances comes less than a week before the U.S. central bank is widely expected to cut borrowing costs for the first time since the coronavirus-induced recession. Policymakers are taking the step as inflation slows in hopes of preventing a sluggish labor market from worsening further, potentially triggering a broader economic downturn. The stock market ended the second quarter near record highs, with the S&P 500 returning a total of 4.3% including reinvested earnings.