Rising home prices have made it tougher for many Americans to buy a home, but there's an upside for the roughly two-thirds of adults who are already homeowners: a spike in their home equity.

Homeowners with mortgages saw the equity in their homes climb by 8.6% — or an average of $24,000 — in the fourth quarter of 2023 compared with a year earlier, according to new data from CoreLogic. Homeowners in Rhode Island, New Jersey and Massachusetts saw even greater gains during that time period, registering growth of $62,000, $55,000 and $53,000, respectively. 

Those three states led the nation in home value appreciation last year, which helped fuel gains in equity, CoreLogic said.

All told, homeowners garnered $1.3 trillion in equity in 2023. 

Because home equity represents the difference between the value of your home and your mortgage, rising home values typically result in equity gains for homeowners. The national median asking price for homes reached $415,500 in February, according to Realtor.com, while the total value of U.S. homes grew 5.3% between December 2022 and December 2023, according to a Redfin estimate of 90 million properties. 

The gains likely comes as welcome news for U.S. homeowners, many of whom borrow against their home equity to pay for repairs on their property, fund their kids' college educations or make pricey purchases. Some Americans even use the equity in their home to purchase another house. 

In many instances, home ownership represents the main wealth-building source for U.S. families. 

Below are the 10 states where homeowners saw the biggest jumps in home equity last year, according to CoreLogic:

• Rhode Island: $62,000
• New Jersey: $55,000
• Massachusetts: $53,000
• California: $49,000
• New Hampshire: $46,000
• Connecticut: $45,000
• Maine: $39,000
• Florida and Virginia: $32,000
• Washington: $30,000

Texas was the only state where homes lost equity, with an average loss of $6,000.

Selma Hepp, chief economist for CoreLogic, said the nation's rising home equity "suggests that the typical homeowner has notable home equity reserves that can be tapped if needed." 

Hepp also noted that rising home equity has helped tens of thousands of homeowners who were underwater on their mortgage, meaning their loan balances were greater than their homes were worth.

"Now, slightly more than 1 million borrowers are underwater, the lowest number recorded in CoreLogic historic data and significantly below the 12 million seen coming out of the Great Recession," she said.

Americans are struggling to purchase a home as mortgage rates and asking prices have soared in recent years but wage growth hasn't kept pace. The typical home buyer needs to earn more than $106,000 a year to comfortably afford a home, which is about 80% more in earnings compared to four years ago, a Zillow analysis published last week found. 

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.

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