More homeowners are seeing an increase in equity as home prices continue to rise across the U.S. according to the most recent report from CoreLogic, a global information, analytics and data-enabled solutions provider.

Homeowners with a mortgage saw a total increase of about $783 billion in equity in 2016, an increase of 11.7% from the year before. This amounts to just over 1 million borrowers moving out of negative equity during the year. This increase brings the percentage of homeowners with positive equity to 93.8% of all mortgaged properties.

“Average home equity rose by $13,700 for U.S. homeowners during 2016," said CoreLogic Chief Economist Frank Nothaft. “The equity build-up has been supported by home-price growth and paydown of principal.”

“The CoreLogic Home Price Index for the U.S. rose 6.3% over the year ending December 2016,” Nothaft said. “Further, about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”

During the fourth quarter, the total number of mortgaged homes with negative equity hit 3.17 million, or 6.2% of all homes with a mortgage. This is a decrease of 2% from last quarter’s 3.23 million homes, and a drop of 25% from last year’s 4.23 million homes.

Negative equity, often referred to as being "underwater" or "upside down," applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.

The total amount of negative equity totaled $283 billion at the end of the fourth quarter. This is down 0.3% or $700 million from the third quarter and down 8.4% or $26 billion from last year.

“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” CoreLogic President and CEO Frank Martell said. “The states with the largest home-price appreciation last year, according to the CoreLogic Home Price Index, were Washington and Oregon at 10.2% and 10.3%, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively.”

“This is double the pace for the U.S. as a whole,” Martell said. “And while statewide home-price appreciation was slower in California at 5.8%, the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”

This chart demonstrates the gap between states such as Nevada with a high share of near and negative equity and the nearly depleted share in states like Texas.

Click to Enlarge

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(Source: CoreLogic)

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