Home equity levels remain high even as price appreciation has cooled

The average U.S. mortgage holder has more than $300,000 in home equity, a figure that’s up significantly since the start of the COVID-19 pandemic as national equity levels now stand at $17.5 trillion.

That’s according to Cotality’s second-quarter 2025 home equity report released on Friday. The report noted that the average homeowner with a mortgage saw their equity decline in the past year by roughly $9,200. But the typical homeowner still has about $307,000 in accumulated, which is the third-highest quarterly total in the history of Cotality’s dataset.

“Nevertheless, homeowners should pay extra attention to the moderating market, however small the cuts,” the report explained. “After gaining $25,000 in 2023 and another $4,500 in 2024, recent equity gains have stalled.”

The pullback in equity levels resulted in an increase in the share of underwater homes — those that are worth less than their mortgage balances. As of Q2 2025, the share of mortgaged homes with negative equity was 2%, up from 1.7% a year earlier.

Cotality is forecasting a national home-price increase of 3% over the next year. While that’s a slower pace compared to recent years, it’s a positive trend for current homeowners.

“The share of homes in negative equity is unlikely to change much over the next year,” Cotality reported. “Current data shows that 144,000 properties would regain equity if home prices rose 5%, but 242,000 would fall into negative equity if prices fall 5%.”

Cotality chief economist Selma Hepp said that home-price appreciation in 2025 is at its slowest pace since 2008. But even in markets that have seen price declines, home equity levels remain at historically high levels. The report pointed out that in Washington, D.C., and Florida, prices have gone down in the past year, but the average homeowner still has $350,000 and $290,000 in equity, respectively.

“With the reduced pace of appreciation, seasonal fluctuations in home prices will have a pronounced impact on equity changes,” Hepp said. “Recent declines also highlight the benefits of accessible equity as some homeowners leverage their equity for alternative financial purposes.”

When breaking down the data by state, the largest equity gains during the year ending in Q2 2025 were found in the Northeast states of Connecticut ($37,400 per homeowner), New Jersey ($36,200) and Rhode Island ($31,200). Midwest states like Illinois, Wisconsin, Michigan and North Dakota also posted gains.

The rest of the country, however, saw equity levels fall. These were led by the District of Columbia (-$34,400), Florida (-$32,100) and Montana (-$26,900).

Among the country’s largest metro areas, Cotality reported that Boston had the largest year-over-year equity gain at $25,600 per homeowner. San Francisco had the largest decline at $31,700, although the share of homes with negative equity there remained below 1%.