9.7 million or 19.8% of all residential properties with a mortgage were still underwater in Q1 2013, according to CoreLogic's negative equity report. This is down from 10.5 million or 21.7% in Q4 2012.
Homeowners are in negative equity when they owe more on their mortgage than their home is worth.
The value of all homes in negative equity fell by $50 billion to $580 billion at the end of the first quarter.
Rising home prices have helped moved more homes into positive equity. "We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap," said Anand Nallathambi, CEO of CoreLogic in a press release.
Declining negative equity is important for the housing recovery, because homeowners in negative equity are more likely to default on their mortgages. The decline in distressed inventory was part of the reason home prices began to appreciate in 2012.
At 45.4%, Nevada had the highest percent of mortgage homes in negative equity. And Nevada, along with Florida, Michigan, Arizona and Georgia accounts for 32.8% of negative equity in the U.S.
Here's a look at negative equity share across the U.S.:
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