“Shadow inventory” of homes continues to decline

CoreLogic, a provider of information, analytics and business services, has reported that the current residential shadow inventory as of July 2011 declined slightly to 1.6 million units, representing a supply of five months. 

Also known as pending supply, shadow inventory is an estimate calculated by the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned by lenders. 

July’s 1.6 million units is down from 1.9 million units a year ago, and follows a decline from April 2011 when shadow inventory stood at 1.7 million units. The moderate decline in shadow inventory is being driven by a pace of new delinquencies that is slower than the disposition pace of distressed assets, according to CoreLogic.

In a prepared statement, Mark Fleming, chief economist for CoreLogic, said: “The steady improvement in the shadow inventory is a positive development for the housing market. However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”