While Attom's recent quarterly numbers for the share of underwater mortgages show improvement in the near term, the percentage is running higher than it was a year ago, revealing regions with stress.
The share of seriously underwater loans relative to all outstanding mortgages stood at 2.7% at the close of the second quarter, according to the real-estate data provider. The percentage inched down
At the same time, the percentage of equity-rich homeowners — whose outstanding balances are less than half their property value — pulled back from last year's high but still accounted for nearly half, or 47.4% of all loans.
That share decreased from second-quarter 2024's 49.2% but headed back up after three quarters of declines. In the first quarter, the rate had fallen back to 46.2%.
"With home prices at record highs you'd expect to see owners enjoying more equity in their homes so it's good to see equity-rich rates rebound after a few slower quarters," said Attom CEO Rob Barber in a press release.
"Unfortunately, the increase in equity-rich rates we saw in the second quarter hasn't been spread evenly throughout the country," he added.
While the growth in seriously underwater homeowners, defined as those with unpaid mortgage balances at least 25% more than what their collateralized properties are worth, may raise concerns, the current rate still sits well below 6.6% reported at the start of this decade.
Areas with the greatest housing stress or wealth
Both negative and positive home equity trends also appear to be linked closely to some regions of the country.
Pockets of the country where homeowners appear to be facing the greatest challenges were found in the Southeast. Louisiana led the U.S. with an 11.9% underwater share, followed by Kentucky and Mississippi at 7% and 6.5% respectively. The four metropolitan areas with the nation's highest underwater rates were also located in the three states.
Iowa and Oklahoma rounded out the "top" 5 at 5.9% and 5.6%. Only eight states saw yearly improvement, or falling shares, of underwater properties, Attom found.
"In some states, particularly Louisiana, too many homeowners are still struggling with loan balances that are more than their homes are worth," Barber said.
The slowing pace of home price growth — with some major markets even
At the same time, other parts of the country, particularly New England, can boast of housing wealth. Vermont led the country with 84.9% of homeowners considered equity rich in the second quarter. It was followed by neighboring New Hampshire and Rhode Island both at 60.3%. Montana and Hawaii followed with 59.2% of their homeowners owing less than half of their property's estimated value.
