Homeowner Equity Falling With Housing Prices

Washington, DC, June 10, 2011 -- Falling real estate prices are eroding home equity, according to the Federal Reserve.

In the first quarter, the average homeowner had 38 percent equity, down from 61 percent a decade ago, the Fed said.

The latest bleak snapshot of the housing market came as mortgage rates hit a new a low for the year, falling below 4.5 percent for a 30-year fixed loan.

There are 74.5 million homeowners in the United States. An estimated 60 percent have a mortgage. The rest have either paid off the loan or bought with cash.

Home prices are expected to keep falling until the number of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes financial sense again to buy a house.