Due to rising home prices, the amount of equity U.S. homeowners had as of the third quarter increased by 10.8% year over year, reaching a record high, according to CoreLogic.
Homeowners gained over $1 trillion in equity in the third quarter alone, CoreLogic says in its most recent home equity report.
The number of mortgages in negative equity fell by 18.3% year over year.
The average equity gain of $17,000 per homeowner was the highest in over six years.
“Over the past year, strong home price growth has created a record level of home equity for homeowners,” says Frank Nothaft, chief economist for CoreLogic, in the report. “The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties, and is one reason for the generational-low in foreclosure rates reported in September.”
“The housing market has remained a strong pillar in an otherwise tumultuous economic year,” adds Frank Martell, president and CEO of CoreLogic. “A sharp rise in demand, spurred by record-low interest rates, continues to bolster homeowner equity. And with many people now spending more time than ever before at home, some homeowners have tapped into their strengthening equity to fund renovations.”
Equity gains are likely to persist over the next several months as strong home-purchase demand is expected to remain high and continue pushing prices up, CoreLogic says.
However, CoreLogic’s data show home prices slowing over the next 12 months as new home construction and more existing for-sale homes ease supply pressures. This could moderate the pace of both home price growth and equity gains.