More than 652,000 -- or about half -- of Arizona mortgage holders, are "underwater," or owe more than their homes are worth, according to a CoreLogic report released Tuesday.
The total represents about 49.6 percent of the total housing mortgages in Arizona, which has the second-highest rate of underwater mortgages in the nation.
The CoreLogic (NYSE: CLGX) report said negative equity continues to weigh on the U.S. housing market with 10.9 million residential properties, or 22.7 percent, upside down with borrowers in the first quarter.
The latest figure is a slight improvement from the fourth quarter last year, when 11.1 million, or 23.1 percent, of borrowers reported underwater mortgages.
Nevada posted the highest negative equity percentage with 63 percent of all mortgaged property currently upside down, closely trailed by Arizona with a 50 percent rate and Florida at 46 percent.
Many borrowers in a negative equity scenario are still able to make mortgage payments, but have experienced an income shock; such as a job loss, divorce or death, said CoreLogic Chief Economist Mark Fleming.
Although market indicators indicate slow, but positive economic growth — negative equity will continue to stunt the housing market recovery by holding back sale and refinance activity, he said.
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