Bought a home between 2022 and 2025? You could be most vulnerable to this housing market shift
The share of homeowners sitting pretty on a huge chunk of home equity just hit a nearly five-year low. In a new report , property data company Attom found that just 41% of U.S. homes with mortgages were equity-rich in the second quarter, down from 43% in the first quarter of the year. That might not sound like a huge drop, but just a year ago 47% of homes met the same criteria. To qualify as…
Homeownership in the U.S. appears to be facing a potential shift in the market, as new data reveals that a decreasing number of homeowners are sitting on significant equity in their properties. Property data company Attom's 2026 U.S. Home Equity & Underwater Report highlights that the share of equity-rich homes with mortgages dropped to 41% in the second quarter, down from 43% in the first quarter. This suggests a decreasing trend over the past year, as the rate rose from 47% a year ago.
An equity-rich home is defined as a residential property where a homeowner's mortgage balance does not exceed 50% of the estimated market value of the home. The report also found that 3.2% of homes were "seriously underwater," with mortgage balances surpassing 25% over the estimated market value. This figure remained consistent from earlier this year, but marks a notable increase of 2.7% from the same period in 2025.
Attom CEO Rob Barber stated that while the rates of equity-rich and seriously underwater homes remain healthier than they were before 2020, both have been showing less favorable directions over the past year, indicating a worrying trend. Local data in 2026 show varying stories around home equity, with 13 states experiencing an increase in equity-rich homes quarter-over-quarter.
However, only four states saw a rise from 2025 to 2026. States with rising year-over-year home equity rates include North Dakota, South Dakota, Kentucky, and Wyoming, with North Dakota showing the highest increase at nearly three percent.
The states with the highest proportion of equity-rich homeowners include Vermont at 79%, followed by Montana, Rhode Island, South Dakota, and New Hampshire, where over half of mortgaged homes are equity-rich. However, most states saw a decline in the share of equity-rich homes. Minnesota experienced the most significant annual drop, with home equity falling from 38% to 20%. Michigan, California, Washington, and Missouri also saw declines of roughly 10% or more.
Worryingly, the report reveals that 18 states saw a rise in the proportion of seriously underwater homes in the second quarter, while 33 states experienced an increase year-over-year. Minnesota and Louisiana have the highest percentages, with over 10% of homes in each state considered seriously underwater. Arkansas, Iowa, and Mississippi also have more than 6% of their mortgaged homes in this category.
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