There is about 1/8" of water in the pan and a steady drip coming from the drain. No noticeable leaks coming from supply or output.

Pin hole in the tank? Time for a new one?

If it's actually coming from the drain, then it's not likely a leak, just need to close the drain. But it's unusual for a drain to just start leaking unless you opened it recently.

How old is the unit?

Pan drain outside the house. After noticing that, I went into the attic and discovered water in the pan.

Ah. Misunderstood and thought you were talking about the drain on the water heater unit.

Yes, likely a leak in the tank and it's time to replace

Dealing with this right now, luckily the water heaters are in garage not attic. Old heater is a Bradford-White and lasted a long time so sticking with that brand.

Mine did this and I put a cap on the drain connection (for another 3 yrs . That said, it was in the garage and I didn't care about that. If it was in my house, immediate replacement.

How old is the unit?

Gas/electric?

Attic location or other?

Last serviced or at least sediment drained?

Brand/price/year/photos ...................................

SnowboardAg said:

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Mine did this and I put a cap on the drain connection (for another 3 yrs . That said, it was in the garage and I didn't care about that. If it was in my house, immediate replacement.

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I thought like this too until my 15 year old unit had a catastrophic failure, and the water pooled in the garage, overcoming the rate at which it could drain outside via the pan, and soaked through the walls and back into the house.

Unless it's obviously a simple issue with the drain, I'd turn it off now and replace ASAP.