Real estate sales are still a problem even as the economy improves and unemployment numbers get better.

The economy looks a little stronger. New weekly unemployment claims are falling. More people are going back to work and the GDP is rising. Even consumer confidence took a big jump last month, as a historically warm winter helped everyone feel better – and spend less on energy.

And then there’s the real estate industry, which remains mired in a depression. New home sales remain at or near an all-time low. Pending home sales seem to be trending up, but Realtors say that deals are getting canceled at a historic high rate, thanks to homes failing to appraise out in value and lenders getting nervous twitches in the final moments before a closing.

And then there’s the number of Americans who are underwater with their mortgages (that is, their homes are worth less than the mortgage balance that remains).

According to CoreLogic’s latest report, 11.1 million, or 22.8 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2011, up from 10.7 million properties, 22.1 percent, in the third quarter of 2011.

The study found an additional 2.5 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the fourth quarter. Together, negative equity and near-negative equity mortgages accounted for 27.8 percent of all residential properties with a mortgage nationwide in the fourth quarter, up from 27.1 in the previous quarter.

Nationally, the total mortgage debt outstanding on properties in negative equity increased from $2.7 trillion in the third quarter to $2.8 trillion in the fourth quarter.

“Due to the seasonal declines in home prices and slowing foreclosure pipeline which is depressing home prices, the negative equity share rose in late 2011,” said Mark Fleming, chief economist with CoreLogic, in a statement.

“The negative equity share is back to the same level as Q3 2009, which is when we began reporting negative equity using this methodology. The high level of negative equity and the inability to pay is the ‘double trigger’ of default, and the reason we have such a significant foreclosure pipeline. While the economic recovery will reduce the propensity of the inability to pay trigger, negative equity will take an extended period of time to improve, and if there is a hiccup in the economic recovery, it could mean a rise in foreclosures,” he added.

In other words, the “fragile” economy Federal Reserve Chairman Ben Bernanke spoke of recently, is subject to all sorts of financial shocks, which many homeowners would feel right in their home equity – or lack thereof.

CoreLogic reported that Nevada had the highest negative equity percentage with 61 percent of all of its mortgaged properties underwater, followed by Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent). This is the second consecutive quarter that Georgia beat California (30 percent), which isn’t a surprise since Georgia home prices dropped more last month than in any other state.

Here’s a more interesting statistic: The top five states combined have an average negative equity share of 44.3 percent, while the remaining states have a combined average negative equity share of 15.3 percent. Being even 15 percent underwater isn’t a good thing for a homeowner, but it’s more likely that a homeowner will be able to climb out than if they’re 44 percent underwater.

What isn’t often talked about is the dampening effect all these millions of underwater mortgages have had on the economy, and on individual wealth. The “wealth effect,” which was used to describe how American homeowners felt about their net worth as housing prices were inflating, has been tamped down.

While some consumers are still buying, many aren’t. They’re worried about losing their jobs and whether gas prices are going to hit $5 a gallon (I paid $4.43 per gallon in California this week.) Knowing that their homes are worth $40,000, $50,000, or even $100,000 less than what they owe the lender has changed the calculus, making strategic default a realistic possibility.

Should banks write down millions of loans in order to help dig out from this real estate depression? Would it even work? Some real estate observers believe that the only way to move forward is to help these homeowners find a new level, so that homes can be bought and sold, and homeowners can move on with their financial lives.