Home equity slips in Q3, with more properties falling underwater

The share of U.S. homes that are considered equity rich — where owners owe no more than half of their property’s estimated market value — fell for the third straight quarter, according to ATTOM’s third-quarter 2025 U.S. Home Equity & Underwater Report.

About 46.1% of mortgaged homes were equity rich at the end of September, down from 47.4% in the previous quarter and 48.3% in the third quarter of 2024.

The decline came despite the national median home price rising to a record $370,000.

Meanwhile, the share of seriously underwater homes — those where owners owe at least 25% more than their property’s market value — rose slightly to 2.8%, up from 2.7% in the previous quarter and 2.5% in the same period a year ago.

“Over the past year, the share of equity-rich homes has eased slightly while the portion of seriously underwater properties has edged up,” said Rob Barber, CEO of ATTOM. “After several years of strong equity growth that peaked in 2022, homeowner equity levels appear to be stabilizing. The modest fluctuations seen over the last few quarters may suggest a housing market that’s finding balance after an extended period of appreciation.”

Equity growth concentrated in Northeast

The share of equity-rich homes rose in 19 states compared to the second quarter and in 11 states on a year-over-year basis.

The biggest gains were recorded in Alaska, Illinois, New Jersey, New York and Connecticut.

New York’s share of equity-rich homes increased from 55.2% in the third quarter of 2024 to 57% in Q3 2025, while New Jersey’s share rose from 52% to 53.8%.

Florida, Arizona and Colorado posted the steepest declines, dropping more than five percentage points each compared to a year earlier.

Washington, D.C., and Georgia also saw sharp decreases.

Underwater rates up in most states

Seriously underwater properties increased in 35 states between the second and third quarters, and in 46 states compared to a year earlier.

The largest annualized increases were in the District of Columbia, Maryland, Louisiana, Georgia and Oklahoma.

Louisiana remained the most distressed state, with 11.2% of mortgaged homes seriously underwater. Mississippi, Kentucky, Arkansas and Iowa followed with rates between 5.6% and 6.6%.

Vermont, Rhode Island and New Hampshire had the nation’s lowest underwater rates, all near or below 1%.

Equity-rich homes decline in most major metros

Among 110 metro areas with populations above 500,000, 71.8% saw a quarterly decline in equity-rich homes, while 77.3% saw a drop from the same time last year.

San Jose continued to lead the nation, with 65.8% of mortgaged homes deemed equity rich. It was followed by Buffalo, New York (63.5%); Portland, Maine (61.2%); Los Angeles (60.5%); and Syracuse, New York (59.9%).

Baton Rouge, Louisiana, recorded the smallest share of equity-rich homes at 14.8%, followed by New Orleans (23.5%) and Little Rock, Arkansas (28.3%).

The metros with the highest shares of seriously underwater homes were Baton Rouge (11.7%); New Orleans (8.3%); Little Rock (5.8%); Jackson, Mississippi (5.8%); and Memphis, Tennessee (5.3%).

Midwest counties lead in equity levels

Of the 1,763 counties in the analysis with at least 2,500 mortgaged homes, 22 of the 30 with the highest equity-rich shares were in the Midwest.

Michigan led with 11 counties, followed by Wisconsin with six and Indiana with four.

Marquette County, Michigan, had the highest rate at 91.3%, followed closely by Chittenden County, Vermont (91.1%), and Benzie County, Michigan (90.8%).

Louisiana dominated the list of lowest equity-rich counties, including Vernon Parish (7.6%), Iberville Parish (10.4%) and Acadia Parish (10.8%).

More than half of mortgaged homes were equity rich in 37.8% of the ZIP codes analyzed, down from 41.8% in the second quarter.

The ZIP code with the highest share was 59047 in Livingston, Montana (with 95.7% of homes being equity rich). It was followed by 49855 in Marquette, Michigan (92.3%); and 84532 in Moab, Utah (89.8%).

At the opposite end, 2.6% of ZIP codes had at least 10% of homes seriously underwater.

The highest shares were in 10709 in Eastchester, New York (58.6%), along with multiple ZIP codes in Philadelphia and Baton Rouge.