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U.S. policymakers are concerned that negative home equity arising from the housing market crash may be constraining geographic mobility and consequently serving as a factor in the persistently high national unemployment rate. Indeed, the widespread drop in house prices since 2007 has increased the share of homeowners who are underwater on their mortgages. At the same time, migration across states and among homeowners has fallen sharply. Using a logistic regression framework to analyze data from the Internal Revenue Service on state-to-state migration between 2006 and 2009, we discover evidence that “house lock” decreases mobility but find that it has a negligible impact on the national unemployment rate. A one-standard deviation increase in the share of underwater nonprime households in the origin state reduces the outflow of migrants from the origin to the destination state by 2.7%. When aggregated across the United States, this decrease in mobility reduces the national state-to-state migration rate by 0.05 percentage points, resulting in roughly 103,000 to 140,000 fewer individuals migrating across state lines in any given year. A back-of-the-envelope calculation shows that the impact of reduced mobility due to negative housing equity on the national unemployment rate is likely to be small—on the order of less than one-tenth of a percentage point each year.

Are American Homeowners Locked into Their Houses? The Impact of Housing Market Conditions on State-to-State Migration