The recent deceleration in home price increases is making life more difficult for homeowners whose mortgages are underwater.

Underwater, or upside down, means the mortgage is higher than the home value.

The rise of home prices that started in early 2012 helped those who are upside down. The amount of underwater homes crested at 29 percent of all homes with a mortgage in the second quarter of 2012, according to RealtyTrac.

The surge in home prices since then has vastly improved matters. In the first quarter of this year, 17 percent of those with a mortgage were underwater by 25 percent or more.

The number of equity-rich properties — those with at least 50 percent equity — grew to 9.9 million, or 19 percent of all properties with a mortgage, in the first quarter, up from 9.1 million, or 18 percent of all properties with a mortgage, in the fourth quarter of 2013.

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But now the improvement is tailing off along with home price increases, according to RealtyTrac.

Home prices climbed 13.2 percent in the year through January, the smallest advance since August, according to the S&P/Case-Shiller index.

"I'd expect to see this process of digging out of the hole slow down in 2014, because we expect home price appreciation to slow down in 2014," RealtyTrac vice president Daren Blomquist tells CNBC.

"We're already seeing that in the smaller decrease in underwater homeowners over the last quarter."

For example, in the beleaguered markets of Fresno and Stockton, Calif., 20 to 40 percent of homeowners with a mortgage remain underwater.

Some experts see more downward pressure on home values.

"Prices are rising, even though we should see those gains moderating," Scott Brown, chief economist at Raymond James, tells Bloomberg. "You're still talking about double-digit percentage increases, which aren't going to be sustainable over the long term."

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