The number of U.S. homeowners owing more on their mortgages than their homes are worth declined by 1.7 million from a year earlier, according to recently released data from research company CoreLogic.

The encouraging news suggests home equity is rising for some, but with 21.5% of U.S. home mortgages still “underwater,” 10.4 million homeowners still owe more on their homes than they are worth.

Improved home equity provides a psychological boost to consumers that may spur spending, says CoreLogic economist Sam Khater.

"Home equity is the biggest source of wealth,” says Khater, “so if equity is increasing that has a very large effect on household spending and consumer psychology."

Chief U.S. economist for Deutsche Bank Joseph LaVorgna agrees. "All the things that fed on the downside feed positively on the upside," said LaVorgna.

But as the Wall Street Journal cautions, some of the 1.7 million households with above-water mortgages are “just barely at breakeven and therefore are a long way off from being able to change their finances in any significant way.”