1 in 6 us homes now underwater

Photo: Zillow

Price increases may be slowing down after a year of booming values, but the latest Zillow report highlights just how far the US market recovery has come since the financial crisis, with just 17 per cent of US homeowners now underwater in the second quarter of 2014.

This is the equivalent of 8.7 million homeowners who still owe more on their mortgage than the value of their home, which indicates how far there is still to go - but is also a marked improvement upon the second quarter of 2014, when 23.8 per cent of homeowners had negative equity.

Of the 35 largest metros covered by the site, more than one-fourth of homeowners in Atlanta (28.9 percent), Las Vegas (27.4 percent) and Chicago (27.1 percent) were still underwater on their homes at the end of the second quarter. The lowest rates of negative equity were in San Jose, Calif. (4.6 percent), despite California once being the epicentre of the US housing crash.

Looking ahead, the national negative equity rate is expected to fall to 14.9 percent of all homeowners with a mortgage by the end of the second quarter of 2015, forecasts Zillow.