A new report by real estate data firm CoreLogic says that the number of homeowners with negative equity declined 1.5 percent in the first quarter, dropping to 11.4 million properties from 12.1 million properties in the fourth quarter of 2011. An additional 2.3 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the first quarter.

In Massachusetts, just over 250,000 of the state’s 1.5 million mortgages were underwater, or 16.8 percent, considerably under the national average. An additional 52,446 mortgage were in near-negative equity, or 3.5 percent.

Homeowners with negative equity are "underwater," owing more on their mortgages than their homes are worth.

Together, negative equity and near-negative equity mortgages accounted for 28.5 percent of all residential properties with a mortgage nationwide in the first quarter, down from 30.1 percent in Q4 2011. More than 700,000 households regained a positive equity position in Q1 2012. Nationally, negative equity decreased from $742 billion in Q4 2011 to $691 billion in the first quarter, a fall of $51 billion in large part due to an improvement in house price levels.

"In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative equity share," said Mark Fleming, chief economist for CoreLogic, in a statement. "This is a meaningful improvement that is driven by quickly improving outlooks in some of the hardest hit markets. While the overall stagnating economic recovery will likely slow housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk."

Five so-called "sand" states far and away led the pack in negative equity: Nevada (61 percent), Florida (45 percent), Arizona (43 percent), Georgia (37 percent) and Michigan (35 percent). These top five states combined have an average negative equity share of 44.5 percent, while the remaining states have a combined average negative equity share of 15.9 percent, according to CoreLogic.

Not all underwater home owners are equally badly off. Of the 11.4 million upside-down borrowers, 6.9 million are upside down on only their primary mortgage, and on average are underwater to the tune of $47,000. But the remaining 4.5 million upside-down borrowers had both primary mortgages and the second liens in the form of second mortgages or home equity loans. The average borrower with a second lien was underwater by $82,000, the report said.