U.S. home equity levels pulled back to start the year, with the number of underwater mortgages now at its highest point since early 2022, according to real estate data platform Attom.  

The share of seriously underwater properties across the U.S. increased to 3.2% in the first quarter, Attom researchers said in a new report. The number headed higher from 3% and 2.8% levels recorded in the prior quarter and one year ago. 

The last time the share hit the 3.2% mark was the first quarter of 2022. Mortgaged properties are defined as "seriously underwater" if the balance of loans securing them exceeds their estimated market value by 25% or more.  

Similarly, the number of homes considered equity rich, with outstanding loan balances on the property at less than half of market value, also dwindled to 43.3%, falling to its lowest point since late 2021. 

The equity-rich share dropped from 44.6% three months earlier and 46.2% in the first quarter of 2025.   

Despite recent signs of weakening, underwater rates currently sit lower, while the percentage of homeowners with high equity levels stands higher, in comparison to the pre-pandemic era. 

"Homeowner equity remains relatively strong overall, but we're seeing signs of moderation," Attom CEO Rob Barber said in a press release. "As mortgage rates have risen and home prices have cooled, the share of equity-rich homes has declined in most markets while the rate of seriously underwater properties is edging up across much of the country."

Regional underwater trends

The share of seriously underwater homes increased year to year in 45 states and the District of Columbia, according to Attom's report. States reporting the highest proportion were concentrated in the South Central region of the country, with Louisiana posting an 11.8% rate. 

The Bayou State was followed by Kentucky at 8.5% and Mississippi at 8%. Oklahoma and Arkansas rounded out the top of the list at 6.6% and 6.4%, respectively.

Meanwhile, the District of Columbia saw the seriously underwater share grow at the most rapid pace, rising to 5.3% from 3.8% one year earlier. 

Among the states that managed to shrink their seriously underwater share were both North and South Dakota, as well as South Carolina. 

Where the equity rich grew richer

Similarly, the share of equity-rich properties only grew in six states, led by Illinois and Alaska. 

Among the 44 posting a decline, Florida, where homeowners have had to deal with threats of natural disasters and surging insurance costs, experienced the largest drop, with a 43.2% portion of the market compared to 49.3% one year earlier. Arizona, Colorado and North Carolina also saw shares diminishing by more than 5%. 

While Midwestern states could boast of the most counties rich in equity, with 23 out of the top 30 spots, three different California cities led the list of metropolitan regions. San Jose's 65.2% share of equity-rich borrowers put it in the No. 1 position, followed by Los Angeles and San Diego at 59.3% and 58.2%, respectively.