February 4, 2026
ATTOM just released its latest Q4 2025 Home Equity & Underwater Report, and it offers a clear picture of the U.S. housing market as we move through 2026. The report shows that while overall homeowner equity remains historically high, the pace of growth is slowing, and a small but notable increase in underwater homes is starting to emerge.
The numbers: By the end of 2025, about 44.6% of U.S. mortgaged homes were considered “equity‑rich,” meaning homeowners owed less than half of their home’s current market value.
What this means: This figure tells a bigger story about financial security for millions of Americans. When a home is equity‑rich, the homeowner has a cushion against market swings, more flexibility if they want to sell or refinance, and often lower risk of foreclosure. After years of rapid price growth, many homeowners built up significant equity, which has been a key factor keeping the housing market stable even as mortgage rates rose and affordability tightened.
The numbers: This share of equity‑rich homes dropped a bit from 46.1% in Q3 2025 to 44.6% in Q4 — down from a high of 49.2% in mid‑2024.
What this means: The slight drop shows home prices cooling off a bit in some areas. This isn't a red flag for trouble; it's just prices settling back to more normal levels after years of big jumps. Homeowners still have plenty of equity on average (over $300K per home), keeping foreclosures super low and giving them wiggle room if rates stay high or values dip more.
The numbers: "Seriously underwater" homes, where homeowners owe at least 25% more than the home’s market value, rose to 3.0% of all mortgaged properties in the fourth quarter of 2025, up from 2.8% in the previous quarter.
What this means: This 3.0%, and overall numbers are still low by historical standards. However, it shows that while most homeowners are in strong financial shape, some markets are starting to feel pressure, making it important to watch local trends as we move through 2026.
Stable but Not Booming: Overall homeowner equity remains strong, with nearly half of mortgaged homes holding significant equity. For sellers, this provides flexibility and financial security, especially compared to pre-pandemic levels. Buyers can feel more confident that the market is stable, even if rapid price growth has slowed.
Market Normalization Ahead: The slight easing in equity and the small increase in underwater homes suggest that the housing market is cooling rather than overheating. According to experts in ATTOM’s report, this trend points to healthier long-term conditions, rather than signaling any immediate risk of widespread distress. This creates a more balanced environment where sellers and buyers can make thoughtful decisions.
Regional Differences Matter: Equity levels and underwater rates vary significantly by region. Coastal and high-value markets tend to have higher equity shares, while inland and lower-priced areas can see more variation. This geographic split means that both buyers and sellers need to pay attention to local trends, as opportunities and challenges can look very different depending on where you are.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
