U.S. wealth has shifted to stocks from homes. There are big reasons to worry.

The composition of American household wealth has undergone a notable shift. Equities now represent a larger share of household assets than real estate, a reversal from the historical pattern in which home equity formed the bedrock of most families' net worth. The catalyst is the ongoing bull market, now in its fourth year, which has been powered substantially by enthusiasm around artificial intelligence.

That concentration carries implications worth understanding. When stock holdings loom larger in household balance sheets, consumer spending and confidence become more sensitive to equity market moves. A sustained decline in share prices could therefore transmit more quickly into the broader economy than in past cycles, when housing played that role.

A second consideration is the cost of money. A rising equity market can tighten financial conditions in its own way, as strong asset prices and associated demand can contribute to higher borrowing costs. For observers, the key questions are whether earnings justify current valuations and how households would respond if the market's momentum stalled.