The presence of negative equity not only drives foreclosures, reduces the availability of purchase down payments and impedes refinances, but also restricts the ability of owners to list their homes for sale as the demand side of the market improves,” according to Corelogic. Because negative equity tends to be higher among homes with lower home values, supply also tends to be tighter, and that has spurred a rise in prices at the lower end of the price spectrum, the report said.

“Over the last two months, the prices of less expensive properties (those priced at less than 75 percent of the median) are up an average of 4.5 percent from a year ago, compared to 0.6 percent for higher-priced homes”, according to Corelogic. Despite this, statistics report the number of underwater properties decreasing during the month of April.