After years of climbing to record territory, U.S. homeowner equity eased modestly in Q4 of 2025, according to ATTOM’s latest Home Equity & Underwater Report. The data underscores what industry analysts describe as a normalization of the housing market — stabilizing after unprecedented gains that followed the pandemic and into the early 2020s.
During Q4 2025, 44.6% of mortgaged residential properties nationwide were considered equity-rich, meaning homeowners owed no more than half of their property’s estimated market value. This was down from 46.1% in Q3 2025 and marks the lowest share of equity-rich homes since late 2021, yet remains substantially higher than pre-pandemic levels (26.5% in early 2020).
The pullback in equity-rich properties reflects broader market adjustments as home price appreciation has moderated from the heady pace seen earlier in the decade. Despite the quarterly decline, equity positions remain historically robust, sustaining a significant equity cushion for many homeowners. According to ATTOM CEO Rob Barber, this moderation is not inherently a bearish signal, but rather, suggests a more balanced market entering the spring home-buying season.
“After years of rapid gains, homeowner equity is settling into a more sustainable range, and that’s not a negative sign for the market,” said Barber. “Even with a modest pullback in equity-rich properties and a slight uptick in seriously underwater homes, overall equity levels remain remarkably strong by historical standards. As we move toward the spring buying season, these numbers suggest a housing market that is stabilizing rather than overheating, giving homeowners a solid financial foundation while allowing for healthier market dynamics.”
On the opposite end of the spectrum, properties with seriously underwater mortgages — defined as those where combined loan balances exceed estimated market values by at least 25% — ticked slightly higher in Q4. About 3.0% of mortgaged homes fell into this category, up from 2.8% the prior quarter, but still at or near historic low levels relative to the last decade.
State-Level Patterns And Regional Variations
Equity trends varied significantly across the country. In 42 of 49 states, the percentage of equity-rich mortgages declined both quarterly and year over year. The largest annual downturns were observed in states like Florida (from 50.9% to 43.9%), Kentucky (38.5% to 32.1%), South Carolina (from 46.7% to 40.9%), New Mexico (from 49.6% to 44%), and Arizona (50.9% to 45.4%).
However, some markets bucked the national trend. States in the Northeast and Midwest saw modest year-over-year increases in equity-rich proportions. Notable gains occurred in Alaska (31.5% to 33.5%), North Dakota (32.4% to 33.7%), Illinois (33.0% to 33.7%), South Dakota (52.3% to 52.8%), and New York (54.9% to 55.4%).
Looking at the highest echelon of owner equity, coastal and Northeastern states led the nation. Vermont topped the list with 87% of mortgaged homes equity-rich, followed by New Hampshire (60.2%), Rhode Island (59.4%), Maine (58.1%), and Montana (57.3%). Other high-equity states included New York, Massachusetts, California, and Hawaii. Conversely, Louisiana (20.1%), Maryland (28.4%), the District of Columbia (30%), Kentucky (32.1%), and Iowa (32.9%) were among the states with the lowest shares of equity-rich homes.
