When your house is worth less than the amount you owe on your mortgage, it makes no sense to sell.
Coincidentally, the U.S. housing industry is struggling with low inventory. Business Insider reports that as more homes recover from being underwater, the inventory on the market can improve.
Negative equity is improving even in the states that suffered the most in the housing crash. In the four so-called sand states — Nevada, California, Arizona, and Nevada — which suffered the most in the housing crisis, it has sharply fallen. California, Woloshin noted, had a lower percentage of mortgaged homes underwater than the national level in the second quarter.