US household net worth soared by 5.6 percent or $6.9 billion to $130 trillion in the fourth quarter 2020, a Federal Reserve report showed.
This was driven by rising stock prices and residential real estate values after the government took unprecedented steps to ease the financial fallout from the pandemic.
Household debt increased at an annual rate of 6.5 percent, the fastest in 13 years, according to data compiled by Bloomberg.
Record-low mortgage rates attracted first-time homebuyers as well as those looking for more space. A measure of home prices in 20 US cities surged by more than 10 per cent in December from a year earlier. At the same time, stocks continued to rally.
The report showed the value of equities increased by almost $4.9 trillion, while the value of real estate held by households by $915 billion. Mortgage debt grew at an annual rate of 5.2 percent after rising 5.7 percent in the third quarter, the biggest back-to-back increases since 2007.
In addition to the jump in wealth from homes and stock portfolios, Americans also saw another big jump in savings. This provides consumers with plenty of firepower for spending and helps explain why economists are projecting stronger economic growth figures this year.
Net savings for all of 2020 increased to a record $2.85tn, more than double the previous peak in 2018.
The data also highlighted the unevenness of the economic recovery.
While the pandemic has led to a surge in savings and opportunities for many Americans to buy a home or invest, the downturn has disproportionately impacted low-income workers, many of whom are struggling to pay their rent.