This State Leads the U.S. With the Worst Underwater Mortgage Rates

Housing affordability continues to be a primary concern in many parts of the country, according to newly released research.

The latest Housing Risk Report from ATTOM, a real estate analytics firm, spotlights county-level housing markets around the United States that are more or less vulnerable to declines.

The assessment is based on factors such as affordability, home equity, and other indicators for the third quarter of 2025—a period when the national median home price reached a record $375,000, according to its data.

ATTOM’s findings identify the states with the greatest concentrations of homes that are underwater, or more is owed on them than they are worth. The report also reveals that, nationally, 2.8% of homes were seriously underwater in the third quarter—defined as having a loan-to-value ratio of 125% or above, meaning the property owner owes at least 25% more than the estimated market value of the property.

Largest share of underwater homes

Louisiana continues to be the center of many of the worst underwater rates in the nation.

The Bayou State accounted for 14 of the 50 counties with the highest share of seriously underwater homes, followed by Illinois with six, Pennsylvania with five, and Arkansas with four, according to ATTOM’s review.

"Softening home prices, easing buyer demand, and lower incomes all contribute to a higher concentration of underwater mortgages in the South compared to other regions," says Hannah Jones, senior economic research analyst at Realtor.com®. "As prices and demand weaken, homeowners have a harder time selling and may find themselves struggling to keep up with mortgage payments."

The Louisiana counties with the highest seriously underwater rates were Calcasieu Parish (17.1% of homes with loans); Rapides Parish (15.4%); Ouachita Parish (13.6%); East Baton Rouge Parish (13.1%); and Tangipahoa Parish (13.1%).

According to Realtor.com data, Louisiana's October median list price comes in at $275,750.

"A high share of underwater mortgages raises concerns around reduced mobility, elevated risk of delinquency or default, and deferred maintenance," Jones explains. "These pressures can cause local housing markets to stagnate, as households are unable to move or invest in their properties, further weighing on neighborhood conditions and property values."

Highest risk markets

But overall, California was deemed the riskiest market in the U.S., according to the report.

The Golden State's "risk" was assessed using factors such as affordability, the share of seriously underwater mortgages, foreclosure activity, and county-level unemployment rates.

Sixteen of the 50 highest risk markets were in California, followed by nine in New Jersey, four in Florida, and three each in Arizona and Texas.

The Golden State also got an F in homebuilding and affordability on Realtor.com's national housing report card.

The top five counties with the riskiest housing markets in ATTOM’s analysis were Butte County, CA; Humboldt County, CA; Charlotte County, FL; Shasta County, CA; and El Dorado County, CA.

The five counties all had unemployment rates at or above 5.1% and at least one foreclosure for every 806 homes.

Least risky markets

Wisconsin leads the nation as the least risky market.

Among the 50 counties deemed least risky in ATTOM’s third-quarter analysis, Wisconsin had seven, Tennessee had five, and Montana, New Hampshire, and Virginia had four apiece.

The least risky counties were Berkeley County, WV; Chittenden County, VT; Erie County, NY; Olmsted County, MN; and Albany County, NY.

All five had unemployment rates at or below 4% and a foreclosure rate of, at most, one in every 2,624 properties.