Property data curator ATTOM released its fourth-quarter 2023 U.S. Home Equity & Underwater Report, which shows that 46.1 percent of mortgaged residential properties were considered equity-rich in the fourth quarter, meaning the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.

The portion of mortgaged homes that were equity-rich in the fourth quarter decreased from 47.4 percent in the third quarter of 2023, marking the second straight quarterly decline. The latest figure also was down from 48 percent in the fourth quarter of 2022.

At the same time, the report shows that the portion of mortgaged homes that were seriously underwater in the U.S. rose slightly in the last few months of 2023, from 2.5 percent to 2.6 percent of all residential mortgages. Seriously underwater mortgages are those with combined estimated balances of loans secured by properties that are at least 25 percent more than those properties’ estimated market values.

“There are increasing signs suggesting that the extended period of prosperity in the U.S. housing market may be showing signs of easing,” Rob Barber, CEO for ATTOM, said in a release. “It’s not as if there are big warning signs flashing. Similar things were happening early last year before the market surged in the spring. But the softening of equity follows a dip in resale profits last year for the first time in more than a decade as prices have stopped soaring through the roof. This year’s peak buying season will tell us a lot about whether things really have settled down long-term.”

Fourth quarter price declines capped off a year when the median home price grew annually by just 2 percent, marking the weakest growth since 2012 when the U.S. housing market was just starting to recover from the aftermath of the Great Recession that hit in the late 2000s. Prices grew at only a modest pace in 2023 amid a mixed scenario of rising mortgage rates that offset upward pressure from a tight supply of homes for sale, strong employment and a rising investment market.

Potential for more uneven equity trends remains in place as the housing market heads into its annual peak spring and summer buying season but faces elevated prices that remain a financial stretch for wide swaths of the potential buying public, ATTOM said.

ATTOM data show the portion of mortgages that were equity-rich decreasing in 41 of the 50 U.S. states from the third to the fourth quarter of 2023, commonly by 1 to 3 percentage points. The biggest declines came in the Midwest and West regions, led by Missouri (portion of mortgages homes considered equity-rich decreased from 41.9 percent in the third quarter of 2023 to 37.3 percent in the fourth quarter), Minnesota (down from 39.5 percent to 35.9 percent), Michigan (down from 48.5 percent to 45.1 percent), Washington (down from 56.7 percent to 53.5 percent) and Utah (down from 56.8 percent to 53.7 percent).