In welcome news for homeowners braving a volatile housing market, home equity in the U.S.—the share of your property you actually own—reached the third-highest level on record at the end of last year, rising by more than $3 trillion.
The total value of owner-occupied real estate registered at a massive $48.1 trillion, making it the third-highest value on record, according to the Federal Reserve’s Flow of Funds data for the fourth quarter of 2024.
Home equity followed a similar trajectory, also reaching the third-highest value at $34.7 trillion—and offering homeowners some relief amid growing economic uncertainty, coupled with stubbornly high mortgage rates in the high 6% range.
“While not a record, today’s high home equity is an important cushion for homeowners and the economy, says Realtor.com® Chief Economist Danielle Hale.
For context, even if homes were to shed 10% of their value overnight, equity would still be at a respectable 69.5%, similar to the second half of 2021, according to Hale. Meanwhile, a sudden loss of 20% of value would reduce the equity to 65.6%.
Home values hover near record levels
From October to December 2024, the total value of owner-occupied real estate, or the market value of all homes owned by those living in them, shed $400 billion from the previous quarter’s high, settling at $48.1 trillion, according to a Realtor.com analysis of the Fed’s data.
This reflects a retreat from the highest total recorded earlier in 2024. But on the plus side, homes gained $3.2 trillion in value over the past year, highlighting the surge of the housing market over the past 10 years.
To put the data in a historical context, the total value of U.S. real estate in mid-2016 was less than half of what it was at the end of last year.
Mortgage debt soars to a new record high
Even as home values continued to grow, so did the mortgage debt, soaring to new a record high of $13.3 trillion.
This figure represents an increase of $100.5 billion from the previous quarter and $340.2 billion from the same period a year ago.
However, while mortgage debt has continued to go up year over year, the annual growth pace remained flat with the previous quarter at 2.6%, and it has slowed down since Q2.
Hale notes that the year-over-year growth in mortgage debt is in line with what was typical in 2017 to 2019, and less than half of the COVID-19 pandemic-era values seen from mid-2020 to mid-2023.
Homeowners’ equity follows the trend of home values
With rising mortgage debt and sliding real estate value, home equity saw a half-trillion-dollar plunge in the fourth quarter, based on the Fed’s report.
But it was not all doom and gloom, because equity still managed to add nearly $3.2 trillion over the past year, with the aggregate, or total, value held by U.S. homeowners hitting $34.7 million at the close of 2024.
When measured as a share of real estate value, home equity is at 72.2%, matching what was seen in the first quarter of 2024, but lagging behind the middle six months of the year.
“The last time home equity was this high as a share of real estate value was before 1960,” says Hale.
In the second quarter of 2024, equity climbed to 72.7%, the highest level since 1958, according to the Federal Reserve’s figures.
States where home equity grew the most in Q4 2024
(CoreLogic)
At the end of 2024, homeowners with mortgages, which account for more than 60% of all properties, gained $280.9 billion in home equity, but borrowers in some states fared significantly better than those in others.
An average homeowner saw their home equity increase by $4,100 in the fourth quarter of last year compared with the same period in 2023, representing an uptick of 1.7%, according to a new quarterly report from CoreLogic.
But that number was down nearly $2,000 from the third quarter of 2023, when the average gain was $6,000.
Northeastern states saw by far the biggest gains in home equity in the fourth quarter, with New Jersey emerging as the leader with an average increase of $39,400, followed by Connecticut with $36,300, and Massachusetts with $34,400.
On the other side of the spectrum, the most dramatic losses in home equity were seen in Hawaii, where the average equity value shed $28,700. Florida was in the second spot, with an average loss of $18,100, and Washington, DC, was third, with an average loss of $14,700.
“Housing equity growth slowed in 2024 versus 2020–23 due to moderating price appreciation, but homeowners maintain substantial equity gains from prior years, preserving their strong financial position,” said Selma Hepp, chief economist for CoreLogic.
