WASHINGTON - Falling home prices have shrunk the equity Americans have in their homes to nearly the lowest percentage since World War II.

Average home equity plunged from more than 61 percent at the start of 2001 to 38 percent in the January-March quarter this year, the Federal Reserve said in a report yesterday. That drop comes as home prices in big metro areas have reached their lowest level since 2002.

The Fed's quarterly report shows how much wealth, or net worth, Americans have gained or lost. Net worth is the value of assets such as homes and stocks, minus debts like mortgages and credit cards.

Americans' overall net worth grew 1.65 percent in the January-March period, to $58.06 trillion, because of stock market gains. Stock values as measured by the Dow Jones U.S. Total Stock Market Index gained $970 billion last quarter. But since then, they've lost $651 billion through Wednesday's stock-market closing.

The report showed that corporations are still hoarding cash. The reluctance of companies to spend more of their cash stockpiles helps explain why job growth has been slow.

Many Americans are reducing their home mortgage debt because they're going into default on their payments and losing their homes to foreclosure. The average household owes nearly $119,000 on mortgages, credit cards, auto loans and other debt, according to an Associated Press analysis of government data. That's down from more than $125,000 in 2008.

Normally when people pay down their mortgages, they see their home equity rise. But since the housing bubble burst in 2006, prices have fallen more than they did during the Great Depression. In many cases, people are paying off mortgage interest and losing equity at the same time.

There are 74.5 million homeowners in the United States. Nearly 25 percent of those homeowners are "underwater," which means they have negative equity in their homes, according to the private real estate research firm CoreLogic. Another 25 percent are nearing that point.