In yet another sign that the housing market is still in a state of flux, more American homeowners owe more on their mortgages than what their properties are worth in Q2 2026 than in Q2 2025. Real estate data company ATTOM reported that 3.2% of mortgaged residential properties are underwater, the term used where the combined estimated loan balances are at least 25% more than the property’s estimated market value. The percentage is the same as Q1 2026, but bigger than Q2 2025’s 2.7%.
States with the highest shares of badly underwater homes in Q2 were Minnesota, Louisiana, Iowa, Mississippi and Arkansas. The problem is nationwide. The problem worsened in Q2 in 33 states and Washington, D.C., but Minnesota was on top, so to speak, with 12.1% of mortgaged homes seriously underwater, up from just 3% in Q1 and 2.6% in 2025.
Other news from ATTOM was also concerning, as only 41.1% of mortgaged homes in America were considered “equity rich” during Q2, meaning the amount owed on the property was no more than half its estimated value, down from 43.3% during Q1 and 47.4% a year earlier. It was the fourth consecutive quarterly decline and brought the share of equity-rich homes to its lowest level in nearly five years.
“These two measures of home-equity strength, the rates of equity-rich and seriously underwater homes, remain healthier than they were prior to 2020,” ATTOM CEO Rob Barber said in the report. “However, both have been moving in less favorable directions over the past year, suggesting a trend worth watching.”
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