An estimated 11 million U.S. homeowners owed more on their mortgages than their homes were worth at the end of June, according to a new report from data aggregator CoreLogic.

While the number of homes underwater actually declined by about 200,000 from an estimated 11.2 million in March, the biggest driver of that improvement was foreclosures, rather than price increases, CoreLogic said.

For those who owe more than their homes are worth — about 23 percent of all mortgage holders — the bad news is that the CoreLogic report demonstrates a strong correlation between home-price appreciation and homeowner equity.

In the first six months of 2010, homeowners with little or no equity in their properties saw their home’s value fall by more than 1 percent on average, the report said. For homeowners underwater by 50 percent or more, property values fell by 2 percent, on average.

In contrast, homeowners with equity of 50 percent or more saw their property values increase by more than 1 percent during the same period. Homeowners with 25 to 50 percent equity in their properties saw a slight increase in value — 0.2 percent on average.

As a result, the largest decrease in negative equity occurred among homeowners with loan-to-value (LTV) ratios in excess of 125 percent. The number of homeowners with this level of "severe negative equity" fell to 4.8 million, down from 5 million during the first quarter, as many lost their homes.

"Negative equity continues to both drive foreclosures and impede the housing market recovery," said Mark Fleming, chief economist with CoreLogic, in a statement. "With nearly 5 million borrowers currently in severe negative equity, defaults will remain at a high level for an extended period of time."

CoreLogic said the number of underwater borrowers peaked in the fourth quarter of 2009, and has declined by about 350,000 since then.

The biggest declines in negative equity were concentrated in states with the highest share of underwater borrowers. Nevada experienced an 11.8-percentage-point decline in negative equity share, followed by California, Florida and Arizona (-1.3 percent).

Top 10 states with highest share of negative equity mortgages
1. Nevada (68 percent of 592,000 mortgages)
2. Arizona (50 percent of 1.3 million mortgages)
3. Florida (46 percent of 4.5 million mortgages)
4. Michigan (38 percent of 1.4 million mortgages)
5. California (33 percent of 6.9 million mortgages)
6. Georgia (28 percent of 1.6 million mortgages)
7. Idaho (24 percent of 243,000 mortgages)
8. Virginia (23 percent of 1.2 million mortgages)
9. Maryland (22 percent of 1.4 million mortgages)
10. Utah (20 percent of 470,000 mortgages)

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