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Roughly half (47.4%) of mortgaged U.S. residential properties were considered equity-rich in the third quarter, according to new data from ATTOM – down from 49.2% in the second quarter, which is the largest quarterly decline in four years. The share is also down year-over-year, from 48.5% in the third quarter of 2022.

ATTOM defines equity-rich as “the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.” But while the level of equity-rich homes was in decline, the portion of mortgaged homes that were seriously underwater improved: only 2.5% of all residential mortgages, or one in 40, were considered seriously underwater in the third quarter – the lowest point in at least four years. This is down from one in 36 homes in the second quarter and from one in 35 in the third quarter of 2022.

“By all measures, homeowner equity around the country remained strong during the third quarter as millions of households kept benefitting from the nation’s extended runup in home values. At the same, though, we saw an unusual downturn at the equity-rich end of the spectrum,” said Rob Barber, CEO of ATTOM. “That could have just been a temporary blip. It also could have reflected an increase in long-time owners who had lots of equity built up selling their homes, or perhaps borrowing against their rising wealth and slipping out of equity rich territory. The fourth quarter data should say more about whether residential equity in the U.S. has indeed topped out.”