Following the Fair Housing Act (FHA) in 1968, racial residential segregation declined rapidly in the United States. On the other hand, during the 1970s, the long-run convergence in Black—White wealth gap also halted. In this research I examine how changing segregation affected racial wealth inequality, which I connect through the housing market. First, I present evidence that the relocation of high-income Black families into higher income and previously more White neighborhoods accelerated after the FHA. I also show that this relocation likely had a negative effect on house price increase in neighborhoods with a high share of high-income Black families and the housing wealth differences increased among Black families. Then, I build and estimate a partial-equilibrium heterogeneous-agent overlapping-generation model with spatial equilibrium and endogenous housing prices. With this model I simulate how the relocation of high income Black families affected the Black wealth distribution and the Black-White wealth gap. In the model the end of residential segregation increased wealth inequality among Black households, but it also decreased overall racial wealth inequality. The policy’s positive effect on wealth concentrated among Black families who were previously constrained from moving into the model’s White neighborhood, while renters in the White and owners in the Black neighborhoods experienced modest losses in wealth.