Housing industry analysts have been trumpeting the steady decline in negative equity rates as home prices have climbed during the past two years. But despite those gains, 4 million homeowners remain underwater, with homes worth at least 20 percent less than their outstanding mortgages, according to Zillow’s first quarter “Negative Equity Report.”

That represents a serious problem not just for these homeowners but for the housing market as a whole, Stan Humphries, Zillow’s chief economist and the report’s author, explained.

“It’s great news that the level of negative equity is falling, but what really worries me is the depth of negative equity,” Humphries said in a press statement. “[But] millions of Americans are so far underwater, it’s likely they may not re-gain equity for up to a decade or more at these rates,” “And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt.”

The negative equity rate now stands at 16.9 percent, down from 18.8 percent a year ago; but more than 25 percent of homes at the low end of the price range are underwater compared with only 8 percent of homes in the top end.

Demand is highest at the low end, Humphries noted, from first-time buyers trying to enter the market. And this is creating a roadblock affecting the market as a whole. “Potential first-time buyers have difficulty finding affordable homes for sale because those homes are stuck in negative equity. And owners of those homes can’t move up the chain because they’re stuck underwater in the entry-level home they bought years ago,” Humphries explained. “The logjam at the bottom is having ripple effects throughout the market, and as home value growth slows, it will be years before it gets cleared up. In the meantime, we’ll be left with volatile prices, limited inventory, tepid demand, elevated foreclosures, and a whole lot of frustration.”