Equity-Rich Homeowners Share Hits 5-Year Low

The share of homeowners with substantial equity in their properties has decreased to its lowest point in five years, with 41.1% of mortgaged residential properties classified as "equity-rich" in the second quarter of 2026. This figure represents a decline from 43.3% in the first quarter of 2026 and a more significant drop of over 6 percentage points from 47.4% in the second quarter of 2025. An "equity-rich" homeowner is defined by real estate analytics firm ATTOM as someone who owns at least 50% of their home's value. This trend indicates a cooling housing market, though overall homeowner equity remains stronger than pre-2020 levels, suggesting a return to more typical market conditions.

Despite the overall decline, 13 states experienced an increase in the percentage of equity-rich homes on a quarter-over-quarter basis. Furthermore, four states—North Dakota, South Dakota, Kentucky, and Wyoming—saw year-over-year increases in their equity-rich homeowner percentages. North Dakota's share rose from 30.2% to 32.9%, South Dakota from 52.1% to 53.6%, Kentucky from 35.1% to 36.5%, and Wyoming from 45.3% to 46.6%. These localized increases highlight regional variations within the national housing market.

Concurrently, the number of homeowners with "seriously underwater" mortgages is increasing. A "seriously underwater" mortgage is defined as one where the outstanding debt on the property exceeds its market value by 25% or more. This situation can significantly hinder a homeowner's ability to sell their property without incurring a financial loss, thereby limiting their mobility. In the second quarter of 2026, ATTOM data indicates that 3.2% of properties were seriously underwater, a rate consistent with the previous quarter but up from 2.7% recorded in the same period last year. This rise in underwater mortgages, coupled with the decrease in equity-rich homeowners, signals growing financial strain for a segment of the homeowner population.

ATTOM CEO Rob Barber commented on these trends, noting that while the current rates of equity-rich and seriously underwater homes are still more favorable than those observed before 2020, the recent upward and downward movements over the past year suggest a noteworthy shift in market dynamics. The data, compiled by ATTOM, a provider of real estate data, underscores a period of adjustment in the housing sector, characterized by a reduction in homeowner equity and an increase in mortgage debt relative to property values for some individuals. This contrasts with the robust equity gains experienced by many homeowners in preceding years.