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Decline in Home Equity Rates Signals Market Stabilization

In a notable shift within the U.S. housing landscape, ATTOM, a premier source for property data and real estate analytics, has unveiled its findings from the third quarter of 2025 regarding home equity rates. The report indicates a decrease in the percentage of homes classified as equity-rich, alongside a concerning rise in properties that are considered seriously underwater.

According to ATTOM's report, approximately 46.1% of mortgaged residential properties across the nation were defined as equity-rich in Q3 2025. This figure is a decline from 47.4% in the previous quarter and shows a further decrease from 48.3% reported during the same quarter last year. The drop in this metric highlights a potential trend in the housing market, even as the national median home price reached a historic high of $370,000.

Rob Barber, CEO of ATTOM, commented on the findings, stating, "Despite the persistent rise in home values over the past years, the share of equity-rich homes has slightly diminished while properties that are seriously underwater have seen an increase." He hypothesizes that after an extended period of rapid appreciation, the housing market may be finding a new equilibrium amidst these changes.

Regional Variations in Home Equity

The report sheds light on the fact that the distribution of equity-rich homes varied significantly across states. Contrary to the national trend, 19 states experienced an uptick in the proportion of equity-rich homes since the second quarter of 2025. Notably, Alaska, Illinois, New Jersey, New York, and Connecticut recorded significant year-over-year increases in equity-rich percentages.

However, states like Florida, Arizona, and Georgia experienced substantial drops, with Florida's equity-rich homes decreasing from 52.5% to 46% year-over-year. The findings suggest that while some regions benefit from robust home equity, others struggle as home prices stabilize or decline.

Furthermore, the report highlighted that 2.8% of mortgaged residential properties were categorized as seriously underwater in the third quarter of 2025. This represents a slight upward movement from previous quarters, emphasizing a growing concern for many homeowners. Such properties are described as having loans that exceed the estimated market value by at least 25%, and the increase is noticeable across 46 states year-over-year.

Urban vs. Rural Equity Rates

In urban areas, ATTOM's analysis revealed that 71.8% of the 110 metropolitan statistical areas (MSAs) experienced a decline in equity-rich homes compared to the previous quarter, and a staggering 77.3% saw year-over-year decreases. The highest proportions of equity-rich homes were found in regions like San Jose, CA (65.8%), Buffalo, NY (63.5%), and Portland, ME (61.2%), whereas Baton Rouge, LA (14.8%) and New Orleans, LA (23.5%) reported the lowest percentages.

Local Dynamics and Future Outlook

The report also delves into the performance of specific counties, revealing that many of those with the highest rates of equity-rich homes are situated in the Midwest, with Michigan leading the way. In contrast, Louisiana accounted for most counties with the lowest equity rates, signifying stark regional disparities in homeowner equity.

As we navigate the potential impacts of these shifts, it’s critical to consider how this evolving housing market reflects broader economic trends. ATTOM's insights provide a crucial lens for understanding these changes, suggesting a market that is stabilizing after dramatic fluctuations in home values.

In conclusion, while the decline in equity-rich properties and the rise in seriously underwater homes present challenges, they also prompt a reassessment of the housing market as it seeks balance. The report underlines the importance of ongoing monitoring and analysis to understand how these trends may shape the future of homeownership and real estate investment across the United States.