1.5% of US Homeowners Underwater on Mortgages

As of May 2026, 1.5% of outstanding U.S. homeowner mortgages carried negative equity, meaning the homeowners were "underwater" on their loans. This figure represents an increase from 1% in April 2025, according to data provided to ResiClub by ICE Mortgage Technology. Despite localized home price declines since the pandemic housing boom peaked in summer 2022, the national aggregate of existing home prices remains near all-time highs. This stability, combined with the amortization of ultralow mortgage rates locked in by many homeowners, has prevented a widespread increase in underwater mortgages.

Certain markets, particularly in the West, Southwest, and Southeast, have experienced more significant home price corrections. For instance, Cape Coral-Fort Myers, Florida, saw prices fall 18.9% from their peak, while Austin experienced a 27.3% decline. These corrections have led to a higher concentration of underwater homeowners in these specific regions, though the national percentage remains relatively low. In contrast, at the end of September 2009, following the 2008 financial crisis, the share of underwater homeowner mortgages stood at a much higher 23%, according to Cotality/FirstAmerica data.

The continued strength in national home prices is a key factor mitigating the impact of regional downturns. While new home prices have softened from their peak, existing single-family home prices nationally are still close to their highest historical levels. Furthermore, homeowners who secured fixed mortgage rates between 2% and 3% during the pandemic boom benefit from a larger portion of their monthly payments going towards principal repayment from the outset, effectively reducing their loan-to-value ratio over time.