U.S. Home Equity Slips to Near Five-Year Low as Underwater Properties Rise
Event summary
- 41.1% of U.S. mortgaged homes were equity-rich in Q2 2026, down from 43.3% in Q1 and 47.4% in Q2 2025.
- 3.2% of properties were seriously underwater, unchanged from Q1 but up from 2.7% year-over-year.
- Minnesota saw the largest annual increase in seriously underwater homes, rising from 2.6% to 12.1%.
- 96.3% of major metros experienced a year-over-year decline in equity-rich homes.
The big picture
The shrinking share of equity-rich homes and rising underwater properties reflect a cooling housing market, with significant regional variations. While still healthier than pre-2020 levels, the trend suggests potential risks for homeowners and lenders, particularly in states experiencing sharp declines. The data underscores the need for closer monitoring of local market dynamics amid broader economic uncertainties.
What we're watching
- Equity Erosion
- Whether the declining share of equity-rich homes signals a broader housing market correction.
- Regional Disparities
- How states like Minnesota and California navigate their stark contrasts in home equity trends.
- Market Health Indicators
- The pace at which seriously underwater properties could impact foreclosure rates and market stability.
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