Dive Brief:

• Real estate prices are rising slowly, but not for low-end homes—a predicament that has increased the number of owners who owe more on their mortgages than their homes are worth.

• Zillow reported last week that homeowners at the low end of the market are more likely to be “underwater”—the term for owners with negative equity in their homes. "Higher negative equity rates have become the new normal," Zillow Chief Economist Stan Humphries said in a statement. "We've long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately, that's exactly what we're seeing.”

• Nationally, 16.9% percent of all homes with a mortgage are in negative equity, a number that economists have predicted will fall to 15.4% by year’s end. Still, in the fourth quarter of 2014, the negative equity rate increased in 21 of the 50 largest U.S. housing markets. At the same time, home values nationwide rose by approximately 6%.

Dive Insight:

The growing rate of underwater mortgages in any area is troublesome to local homebuilders, as owners of existing homes are less likely to put them on the market and buy new ones if they are unable to recoup their investment from the sale. Three years into the housing recovery, about half of the 15 million homeowners with negative equity in their homes have pulled out from underwater.