Homeowner Equity Softens but Remains Strong as Housing Market Finds Balance
Homeowner equity across the United States cooled slightly at the end of 2025, signaling a housing market that is beginning to level out after several years of rapid gains. While the share of equity-rich homes slipped from recent highs, overall equity levels remain historically strong and continue to provide most homeowners with a meaningful financial cushion.
According to ATTOM’s fourth-quarter Home Equity report, 44.6% of mortgaged homes were considered equity-rich at the end of 2025. That means nearly half of homeowners owed no more than half of their home’s value. This was down from 46.1% in the prior quarter and below the mid-2024 peak of just over 49%, marking the lowest level since late 2021.
Importantly, this pullback does not signal distress. Instead, it reflects a housing market that is stabilizing as price growth slows after the explosive gains seen between 2019 and 2022. Even with the recent decline, today’s equity levels remain far above pre-pandemic norms, when only about one-quarter of mortgaged homes were equity-rich.
Equity declines were widespread but modest. From the third to the fourth quarter, equity-rich shares fell in most states, typically by less than two percentage points. The largest drops were concentrated in markets that saw some of the fastest pandemic-era price appreciation, where values are now cooling.
At the same time, several Midwestern and Northeastern states posted small year-over-year gains, suggesting that steadier pricing and more balanced demand are helping support homeowner equity in those regions.
Just as important, seriously underwater mortgages remain rare. Only about 3% of homes nationwide owed at least 25% more than their value, a figure that remains close to historic lows and far below levels seen during the last housing crash.
The takeaway is clear: homeowner equity is no longer surging, but it is still strong. That strength helps insulate homeowners from price fluctuations and supports overall market stability as the housing sector moves into a more balanced phase in 2026.
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