(NewsNation) — Around one in 37 homes are now worth much less than their remaining mortgage balance, according to new data released Thursday.

Nationally, the share of “seriously underwater” mortgages — meaning homes with an outstanding loan at least 25% more than the market value — rose from 2.6% to 2.7% in the first quarter, per real estate data firm ATTOM.

However, that share still remains well below the pre-pandemic level when one in 15 homes (6.6%) fell into that category.

In a statement, Rob Barber, CEO of ATTOM, said homeowners continue to benefit from elevated equity but noted that the “windfalls are starting to erode bit by bit.”

The new report found several states, particularly in the South, have a significantly higher share of seriously underwater homes compared to the rest of the country.

Louisiana leads the nation, where roughly one in nine mortgages (11.3%) are seriously underwater, according to the report. Meanwhile, Kentucky saw the largest quarterly increase, jumping from 6.3% to 8.3%.

If a homeowner overpays and the property drops in value, they can slip into negative equity and become “underwater” on their mortgage.

That’s been less of a concern for longtime homeowners who have seen their home equity skyrocket in recent years, but new homeowners haven’t been as fortunate.

Last year, more than 10% of recent homebuyers had properties that were worth less than what they owed. Stiff competition for limited inventory and elevated mortgage rates contributed to that.

As far as major metros with the most seriously underwater mortgages, Baton Rouge, Louisiana, tops the list (13.4%), followed by New Orleans (7.3%); Jackson, Mississippi (6.5%); Little Rock, Arkansas (6%) and Syracuse, New York (5.6%).

The share of “equity-rich” homes, defined as properties with loan balances below 50% of the market value, also fell in the first quarter, down from 46.1% to 45.8%, according to the report.

The latest equity drop-off isn’t necessarily bad news for home shoppers because it may signal a broader decline in home prices.

“Amid the recent trends, this year’s Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing,” Barber said, while also noting it’s too early to tell.

Last week, the average long-term mortgage rate rose to its highest level in five months, 7.22%.

Americans have been hoping for some relief in the form of interest rate cuts, but after multiple hot inflation reports, the Fed intends to keep rates higher for longer.

Today, just 21% of people think it’s a good time to buy a home, tied for the lowest level on record, according to Gallup.

Housing costs now rank second behind only inflation as the most important financial problem facing American families.