Fewer homeowners were underwater as the negative equity rate fell to 13.1 percent in the United States, according to the fourth quarter Zillow Negative Equity Reportⁱ. But more than 820,000 underwater homeowners still owe over twice as much on their mortgages as their homes are worth, a reminder that some owners may not see positive equity in their homes in the foreseeable future.

Six million homeowners were still in negative equity, which means they owe the bank more than their homes are worth. A year ago, 8 million homeowners were upside down on their mortgages.

Over time, negative equity can act as an anchor on a housing market, preventing underwater homeowners from listing their homes and reentering the market.  It is more prevalent in less expensive areas that are affordable to first-time buyers. Without these homes available, many potential buyers are sidelined and unable to take advantage of mortgage rates that remain near historic lows.

In the past year, millions of underwater homeowners resurfaced as the total amount of negative equity declined by $75 billion, but some owners are so far underwater that positive equity may be several years away, leaving them stuck in their homes unable to sell.

"Even though the number of underwater homeowners has fallen significantly since the peak of the housing crisis, negative equity persists in many markets as it fell at its slowest pace in a year," said Zillow Chief Economist Dr. Svenja Gudell. "Things are moving in the right direction, but some owners are still deeply underwater. As we move into the home shopping season, inventory is already low, and negative equity is keeping potential additional stock from becoming available."

Las Vegas, ground zero of the housing crash, still had the highest rate of negative equity at 20.9 percent, followed closely by Chicago, where 20.5 percent of homeowners were upside down on their mortgages. In San Jose, only 2.8 percent of mortgaged homeowners were underwater.