The share of homes in the United States worth less than their loans dropped sharply from the previous year despite an overall increase in negative equity, according to the latest quarterly report by the real estate data company CoreLogic.

In its Homeowner Equity Insights report for the first quarter of 2019, CoreLogic concluded that 4.1 percent of mortgaged homes in the U.S. had negative equity. This share was down 1 percent from the previous quarter and 11 percent from the previous year, with 2.2 million homes in this situation.

Homes with negative equity, also referred to as "underwater" properties, have an estimated value that falls below the outstanding mortgage balances secured by the residence. An increase in home values can help homeowners regain positive equity, along with regular mortgage payments that decrease mortgage principal over time.

The aggregate value of negative equity in the United States at the end of the first quarter of 2019 stood at $304.4 billion. This was up from $301.9 billion in the fourth quarter of 2018 and $284.8 billion in the first quarter of 2018.

Louisiana had the highest share of negative equity, with 10.7 percent of mortgaged properties in the state worth less than their loans. Other states with a high share of negative equity properties included Connecticut (9.3 percent), Illinois (7.9 percent), and New Jersey (6.7 percent).

Washington had the lowest share of negative equity, with just 1.5 percent of mortgaged homes considered to be underwater. The share stood at 1.6 percent in both Oregon and Utah.

Rising home values helped approximately 17,000 homes regain equity in the first quarter of 2019. Nationwide, the aggregate value of home equity rose by 5.6 percent, or roughly $485.7 billion, over the previous year. Frank Nothaft, chief economist at CoreLogic, said the company expects its national home price index to grow by 4.5 percent in the coming year, and that 350,000 homeowners would be restored to positive equity if all homes experience this gain.

Nevada homeowners had the strongest equity gains, with the typical residence seeing an annual boost of $21,000 in value. This was followed by average gains of $20,700 in Idaho and $20,300 in Wyoming. North Dakota and Connecticut were the only states where a drop in equity was more common, with an average loss of about $16,000 in the former state and $1,000 in the latter.

"A moderation in home price growth has reduced the gains in home equity wealth and will likely slow the growth in home improvement spending in the coming year," said Nothaft. "For larger remodeling projects, homeowners often choose to cash out some of their home equity through a first lien refinance or placement of a second lien."

CoreLogic's reports are based on a database of more than 50 million mortgaged properties in the U.S. Its conclusions typically vary from ATTOM Data Solutions, another real estate data company that produces equity reports based on a database of more than 155 million residential and commercial properties. In its report for the first quarter of 2019, ATTOM Data Solutions determined that 9.1 percent of mortgaged properties in the U.S. were seriously underwater, with loans exceeding the estimated market value of the property by 25 percent or more.

https://www.corelogic.com/news/corelogic-reports-the-negative-equity-share-fell-to-4.1-percent-in-the-first-quarter-of-2019.aspx