Even though home prices are higher now than last year, 8.7 million U.S. homeowners remained underwater on their mortgage in the second quarter.
Zillow's negative equity report released on Tuesday night revealed that 17% of homeowners with mortgages were underwater through the second quarter, which is down from both the previous quarter and last year, at 18.8% and 23.8%, respectively.
Nationally, millennial homeowners held 19.6% of all underwater mortgages, Zillow said, while Generation X accounted for 18.7% of the total and baby boomers represented 10.9%.
More than one-third of mortgaged homeowners had effective negative equity, or less than 20% equity in their property, the Seattle-based analytic provider said. A year ago, 41.9% of homeowners were considered to be in "effective negative equity," meaning it is harder for these individuals to cover the costs on selling their home and purchasing a new property.
Zillow is forecasting that the negative equity rate will continue to decline over the next 12 months. The company is projecting the rate to be 14.9% by the end of the second quarter of 2015.
Out of the 35 largest metropolitan statistical areas covered by Zillow, Atlanta had the most underwater homeowners at 28.9%. Meanwhile, more than 25% of Chicago and Las Vegas homeowners were in negative equity, Zillow said. Additionally, Orlando had a second-quarter negative equity rate of 24.9%.
Only six cities had negative equity rates below 10%, including San Jose, Calif. (4.6%), San Francisco (8.2%), Austin, Texas (8.3%), Houston (8.4%), Los Angeles (9.3%) and Denver (9.7%).