Homeowner equity in the United States saw a significant increase in the second quarter of 2024, according to ATTOM Data’s latest U.S. Home Equity & Underwater Report. The report reveals that 49.2% of mortgaged residential properties were considered equity-rich, a term indicating that the combined estimated loan balances secured by those properties were no more than half of their estimated market values.
This rise marks a notable recovery from the first quarter of 2024, when 45.8% of homes were equity-rich, matching a high point reached in the spring of the previous year. The upward trend breaks a cycle of three consecutive quarterly declines and represents one of the most substantial gains in the past five years.
In addition to the increase in equity-rich properties, the report highlights a decline in the percentage of home mortgages that were seriously underwater. The rate dropped to 2.4% in the second quarter, down from 2.7% in the first quarter, reaching the lowest level since at least 2019. Seriously underwater mortgages are defined as those with loan balances at least 25% more than the properties’ estimated market values.
The equity gains coincide with a surge in home prices during the 2024 spring buying season, with the median national home price rising 9% quarterly to a record $365,000. This price increase has helped boost equity levels across much of the country by widening the gap between home values and the amounts owed on loans.
“Homeowner wealth took a notable turn for the better during the second quarter as equity levels piggybacked on some of the biggest home-price spikes we’ve seen in recent years,” said Rob Barber, CEO of ATTOM. “After a period where equity seemed stagnant or even declining, this brought another boost of good news for homeowners from the enduring housing market boom.”
The report attributes the rise in home values to a combination of limited housing supply and high buyer demand, typical during the summer months. Stable mortgage rates, averaging around 7% for a 30-year fixed loan, and a national unemployment rate below 4% also contributed to the positive trend.
Equity-Rich Mortgages Increase Nationwide
The second quarter saw the portion of equity-rich mortgages increase in 48 of the 50 U.S. states, often by more than two percentage points. Annually, equity-rich levels were up in 31 states, with the nationwide figure of 49.2% equity-rich matching that of the second quarter of 2023.
Significant quarterly increases occurred primarily in lower-priced markets across the South and Midwest. Kentucky led the way, with equity-rich properties rising from 28.7% in Q1 2024 to 37.4% in Q2 2024. Other notable increases were seen in Illinois, Missouri, Oklahoma, and Alabama.
Conversely, equity-rich levels remained unchanged in Utah and South Dakota, while the smallest increases were observed in North Dakota, California, and Louisiana.
Decline in Seriously Underwater Mortgages
The share of seriously underwater mortgages decreased nationwide in the second quarter of 2024, falling to one in 42 from one in 37 in the first quarter. This rate was well below the one-in-15 ratio recorded in 2019. The decline was seen in 47 states quarterly and 37 states annually.
The most significant decreases were concentrated in the South and Midwest, with Wyoming, Kentucky, Illinois, Oklahoma, and Alabama leading the way. However, Utah and South Dakota experienced slight increases, while the rates remained unchanged in New Mexico, Kansas, and Idaho.
Regional Trends in Equity-Rich and Underwater Mortgages
The Northeast and West regions continue to boast the highest levels of equity-rich mortgaged properties. Vermont topped the list with 83.5% of mortgaged homes considered equity-rich, followed by Maine, New Hampshire, Montana, and Rhode Island.
On the other hand, the Midwest and South had the lowest percentages of equity-rich properties, with Louisiana, Alaska, North Dakota, West Virginia, and Oklahoma at the bottom of the list.
Among U.S. zip codes with at least 2,000 residential properties with mortgages, nearly half (46.7%) had at least 50% equity-rich properties. The highest concentrations were in California, Florida, and Texas, with notable zip codes in Marquette, MI, Santa Barbara, CA, Newport Coast, CA, Rapid City, SD, and Fort Worth, TX.
Seriously Underwater Mortgages in the Midwest and South
The Midwest and South regions also had the highest shares of seriously underwater mortgages, with Louisiana, Mississippi, Kentucky, Arkansas, and Iowa leading the list. The lowest shares were in Vermont, Rhode Island, New Hampshire, Massachusetts, and California.
This report underscores the dynamic nature of the U.S. housing market, influenced by a blend of economic conditions, regional variations, and seasonal trends. As the market continues to evolve, homeowners and prospective buyers alike will need to navigate these shifting landscapes.
