US Home Equity Declines to 5-Year Low

The proportion of U.S. homes with substantial home equity has reached its lowest point in nearly five years, according to a new report from property data company Attom. In the second quarter of 2026, only 41% of U.S. homes with mortgages were classified as "equity-rich," a decrease from 43% in the first quarter of the same year. This figure represents a notable decline from 47% of homes that met the equity-rich criteria just one year prior, in the second quarter of 2025. For the purposes of the report, a home is considered equity-rich when a homeowner's outstanding mortgage balance is no more than half of the property's estimated market value. The data, detailed in Attom's 2026 U.S. Home Equity & Underwater Report, indicates that this marks the fourth consecutive quarter of diminishing home equity. Concurrently, the report identified that 3.2% of U.S. homes were "seriously underwater," meaning their loan balances exceeded their estimated market value by more than 25%. This rate remained stable compared to the first quarter of 2026 but signifies a substantial increase from the 2.7% recorded in the second quarter of 2025. Attom CEO Rob Barber commented on these trends, stating that while both measures of home equity strength remain more robust than pre-2020 levels, their unfavorable movement over the past year suggests a developing trend that warrants close observation. The report highlights that local housing market conditions and home equity trends vary significantly across different regions of the United States in 2026. On a quarter-over-quarter basis, 13 states experienced an increase in their rates of equity-rich homes. However, when examining year-over-year changes from the second quarter of 2025 to the second quarter of 2026, only four states saw their equity-rich home rates rise. These states were North Dakota, South Dakota, Kentucky, and Wyoming. Among these, North Dakota demonstrated the most significant improvement, with its share of equity-rich homes increasing by nearly three percentage points by 2026. The states boasting the highest overall percentages of equity-rich homeowners were geographically dispersed. Vermont led the nation with 79% of its mortgaged homes being equity-rich. Additionally, Montana, Rhode Island, South Dakota, and New Hampshire reported that more than half of their mortgaged homes possessed a significant portion of equity. The report also tracks homes that are "seriously underwater," a condition where mortgage debt significantly outweighs property value, indicating potential financial distress for homeowners. The data suggests a broader market shift where the cushion of home equity is shrinking for a considerable number of homeowners, particularly those who purchased homes between 2022 and 2025, a period characterized by rising home prices and mortgage rates.