Approximately 48.5% of mortgaged residential properties in the United States were considered equity-rich, meaning the combined estimated amount of loan balances by those properties were no more than 50% of their estimated market values, in the third quarter, according to the quarterly 2022 U.S. Home Equity & Underwater Report from data provider ATTOM. The share of mortgaged homes that were defined as equity-rich in the third quarter increased 0.4% on quarterly basis and 9% on a year-over-year basis. ATTOM’s report found that at least half of all mortgage payers in 20 states were equity-rich in the quarter, compared with seven states a year earlier. Additionally, 17 times as many mortgages are considered equity-rich as “seriously underwater.”

“Even though home price appreciation has slowed down dramatically in recent months, homeowners have continued to build equity,” says Rick Sharga, executive vice president of market intelligence at ATTOM. “And it appears that many of those homeowners have decided to stay where they are rather than purchase a new home, and are beginning to tap into that equity.”

According to ATTOM, 2.9% of mortgaged homes were considered “seriously underwater,” with a combined estimated balance of loans secured by the property of at least 25% more than the property’s estimated market value. Thirty-nine states saw equity-rich levels increase on a quarterly basis, while seriously underwater percentages fell in 38 states. The improvement in home equity during the quarter came as the overall housing market cooled “considerably,” according to ATTOM.

Nine of the 10 states where the share of equity-rich mortgaged homes increased by the largest amount in the third quarter were in the Midwest, Northeast, and South regions. Conversely, the top five states where the share of equity-rich mortgaged homes decreased the most were in the West region.

Despite the declines, the highest levels of equity-rich properties remained in the West during the third quarter of 2022, with six of the top 10 states located in the region. Nine of the 10 states with the lowest percentages of equity-rich properties in the third quarter were in the Midwest and South, led by Louisiana (24.5% of mortgaged homes), Illinois (26.3%), and Alaska (26.7%).

The 10 states with the highest shares of mortgages considered seriously underwater in the third quarter were in the South and Midwest as well. The top five states were Louisiana (10.8% seriously underwater), Mississippi (9%), Iowa (6.5%), Illinois (6.2%), and Kentucky (6%).

The ATTOM U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity at the state, metro, county, and ZIP code level.