The long stretch of soaring home equity that padded American household balance sheets is continuing to unwind. The share of mortgaged U.S. homes considered equity-rich fell to 41.1% in the second quarter of 2026, down from 43.3% in the first quarter and 47.4% a year earlier, according to ATTOM’s Q2 2026 U.S. Home Equity and Underwater Report, released Thursday. It was the fourth consecutive quarterly decline and left the measure at its lowest level in nearly five years.
ATTOM defines a home as equity-rich when the combined loan balances secured against it are no more than 50% of its estimated market value β meaning the owner holds at least half the home’s value as equity.
At the other end of the spectrum, the share of seriously underwater homes held steady at 3.2% from the first quarter but climbed from 2.7% a year earlier. A property is considered seriously underwater when its loan balances are at least 25% higher than its estimated market value.
A slow reversal from record highs
“Both have been moving in less favorable directions over the past year, suggesting a trend worth watching,” said Rob Barber, chief executive of ATTOM.
The shift reflects the cooling housing market. Equity-rich shares surged during the pandemic-era price boom, when rapid appreciation lifted millions of homeowners well above their loan balances. As price growth has slowed β and turned negative in some markets β the cushion has begun to thin, particularly for owners who bought recently with smaller down payments.
The erosion was broad. ATTOM said 104 of the 108 metropolitan areas with populations of at least 500,000 β about 96% β saw their equity-rich share decline from a year earlier.
Wide regional gaps
Geography remained a powerful divider. The states with the highest equity-rich shares were concentrated in the Northeast and Mountain West: Vermont led at 78.9%, followed by Montana (59%), Rhode Island (54.9%), South Dakota (53.6%) and New Hampshire (53.1%).
Among metropolitan areas, the lowest equity-rich shares were in Baton Rouge, Louisiana (15.4%), Minneapolis (16.9%), Fresno, California (18.1%), New Orleans (19.9%) and Richmond, Virginia (22.1%).
Underwater mortgages were similarly uneven. The states with the largest shares of seriously underwater homes were Minnesota (12.1%), Louisiana (10.3%), Iowa (7.8%), Mississippi (6.4%) and Arkansas (6%) β a mix of markets where prices have softened or where buyers financed a larger portion of their purchases.
Equity still historically high
Despite the decline, home equity remains elevated by historical standards. Even at 41.1%, the equity-rich share is far above levels seen in the years following the 2008 housing crash, and the seriously underwater share of 3.2% is a fraction of the double-digit rates recorded during that period. Separate industry data has put total U.S. homeowner equity near record levels even as the equity-rich share slips, reflecting how much wealth accumulated during the boom.
What it means: The four-quarter slide points to a gradual normalization rather than a crisis. For most homeowners, deep equity cushions still provide a buffer against distress, which helps explain why foreclosure activity β while rising β remains historically contained. The bigger risk is concentrated among recent buyers in softening markets, where thinner equity leaves less room to absorb a price decline or a forced sale. If prices keep cooling, the underwater share bears watching, especially in the handful of states where it is already well above the national average.
ATTOM compiles the report from publicly recorded mortgage and property data covering more than 100 million U.S. residential properties.
