1 in 5 Homeowners Underwater

More than one in five American homeowners owe more on their mortgages than their homes are worth, according to a new study. The increase in negative equity has been accompanied by new signs that first-time buyers are taking advantage of lower prices in the housing market. But as prices continue to fall, homeowners who face trouble can struggle to refinance or sell their homes, reports the Wall Street Journal.

The jump in "underwater" homeowners, to 21.9%, poses yet another challenge to the Obama administration's efforts to stabilize the housing market. In February the government unveiled a plan to let homeowners with loans guaranteed by Fannie and Freddie refinance, but only if the loan is at maximum 105% of the house's value. With rising negative equity, officials said they may increase that limit.