Rapidly rising home prices are bad news for prospective buyers, but they’re proving quite beneficial for homeowner equity.

That’s according to a new report from ATTOM Data Solutions that found that in the second quarter of 2024, 49.2% of mortgaged homes were “equity-rich,” defined as having a loan balance of less than half of the estimated market value of those homes. 

It’s a 3.4 percentage point rise from the first quarter of 2024 and breaks a three-quarter streak of declines.

In addition, the number of homes with a mortgage balance of more than 25% of the property’s estimated market value — or “seriously underwater” — fell from 2.7% in the first quarter of 2024 to 2.4%. It’s the lowest level since at least 2019.

“Homeowner wealth took a notable turn for the better during the second quarter as equity levels piggybacked on some of the biggest home-price spikes we’ve seen in recent years,” said ATTOM CEO Rob Barber in the report. “After a period where equity seemed stagnant or even declining, this brought another boost of good news for homeowners from the enduring housing market boom. Supplies of homes for sale remain limited these days and buyer demand is typically elevated during the summertime. It should be no surprise if home values go even higher and take equity along for the ride.”

Relatively affordable markets in the south and midwest drove the gains. Kentucky experienced the biggest quarterly jump in equity-rich homes, rising from 28.7% to 34.7%. The next highest percentage-point gains were Illinois (7.8 points), Missouri (7.2 points), Oklahoma (6.4 points), and Alabama (6.2 points).

However, states in the south and midwest also have the highest share of homes that are seriously underwater, with Louisiana (10.5%), Mississippi (6.8%), Kentucky (6.3%), Arkansas (5.4%) and Iowa (5.2%). The lowest shares of seriously underwater mortgages are Vermont (0.7%), Rhode Island (0.9%), New Hampshire (1%), Massachusetts (1.1%) and California (1.2%).

States with the highest shares of equity-rich mortgages are Vermont (83.5%), Maine (61.5 percent), New Hampshire (61.1%), Montana (61.1%) and Rhode Island (60.2%).

There are other notable trends in the report. Between Q1 and Q2, the share of equity rich homes increased in 48 states. On a year-over-year basis, the share rose 31 states, though the national share year over year stayed flat at 49.2%.