Home Equity Hits Record $18T Amid Rising Delinquencies

U.S. home equity reached a record $18 trillion in the second quarter of the year, as annual home price growth accelerated to its highest point in 14 months by July. This milestone was detailed in Intercontinental Exchange (ICE)’s August Mortgage Monitor report, which also indicated a concurrent rise in mortgage delinquencies and foreclosure activity. The report stated that annual home price growth climbed to 1.5% in July, marking the fifth consecutive month of acceleration and the strongest single-month increase observed in over three years. ICE attributed the boost in housing demand during the early part of 2026 to lower mortgage rates, though it cautioned that subsequent rate increases could temper further acceleration in the latter half of the year. Andy Walden, head of mortgage and housing market research at ICE, highlighted the significance of $18 trillion in mortgage holder equity, characterizing it as a reflection of substantial wealth accumulation by American homeowners. He noted that the spring market provided a significant uplift to both prices and equity, with these positive effects now evident in the data. However, Walden also pointed out that the upward trend in mortgage rates since the beginning of the year might limit the extent of additional acceleration expected in the second half. In the second quarter, mortgage holders possessed $11.7 trillion in tappable equity, with approximately 47.5 million borrowers holding an average of $212,000 each. Total mortgage debt exceeded $15 trillion for the first time, although this debt level remained historically low relative to overall home values. Concurrently, the number of mortgage holders who were underwater on their loans increased by 44% year-over-year, reaching 813,000 individuals. The number of borrowers who were both underwater and behind on their payments at the start of the third quarter was approximately 320,000, nearly double the figure from the previous year. Geographically, Texas and Florida together accounted for 39% of all underwater homes nationwide. Mortgage delinquencies experienced a modest increase in June, with the national delinquency rate rising by 5 basis points to 3.55%. This increase was roughly half of the typical seasonal rise and remained below the 4.16% rate recorded in June 2019. The share of mortgages in active foreclosure proceedings also saw an increase, though specific figures for this metric were not detailed in the provided text beyond the mention of rising foreclosure activity.