CoreLogic said today that the shadow inventory or pending supply of homes at the end of July consisted of 1.9 million homes with an approximate market value of $293 billion. The shadow inventory is a measure of the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers, but not currently listed on multiple listing services (MLSs) and is not typically included in official estimates of unsold inventory. 

At the present rate of sales this inventory represents a 3.7 month supply.  In July 2012 there were 2.4 million homes in the shadow inventory and at its peak in 2010 there were 3 million.  The recent figure represents decreases of 22 percent and 38 percent respectively from those figures.  The inventory consisted of 874,000 properties that were seriously delinquent (1.8 months' supply), 661,000 in some stage of foreclosure (1.3 months' supply) and 318,000 that were already in REO (0.6 months' supply).

CoreLogic said foreclosures were completed in August at a rate only two-thirds that of a year earlier.  There were 48,000 completed foreclosures during the month compared to 72,000 in August 2012, a decrease of 34 percent.  The number was up 1.3 percent from the 47,000 completed in July.

CoreLogic said that, despite the significant year-over-year drop in foreclosures they are still running at more than double what might be considered a "typical" rate.  The company's analysis points to the 2000 to 2006 period during which completed foreclosures averaged 21,000 per month nationwide.  There have been approximately 4.5 million homes lost to foreclosure since the housing crisis began in September 2008.  

As of August there were approximately 939,000 homes in the national foreclosure inventory, i.e. homes in some stage of foreclosure.  This is a 33 percent drop from the 1.4 million homes in the inventory in August 2012.  Month over month, the foreclosure inventory was down 3.2 percent.  The inventory represents 2.4 percent of all homes with a mortgage; a year earlier the inventory was at 3.3 percent.

The serious delinquency rate, that is homes that are 90 days or more past due, was 5.3 percent at the end of August or 2.1 million mortgages.  This is the lowest serious delinquency rate since December 2008.

"The foreclosure inventory continues to improve, as exhibited by these recent numbers," said Dr. Mark Fleming, chief economist for CoreLogic. "A surge in completed foreclosures and a rise in the foreclosure inventory is unlikely given continued house price improvements and shortages of supply in many markets."

"Over the past year, the value of the U.S. shadow inventory dropped by $87 billion-a sign of increased normalcy in the housing market," said Anand Nallathambi, president and CEO of CoreLogic. "With a year-over-year decrease of 22 percent in July, the shadow inventory has now declined steadily for 10 consecutive months."

Five states, Florida, Michigan, California, Texas, and Georgia accounted for almost half of all completed foreclosures over the 12 months ending in August.  Florida had 111,000 completed foreclosure actions, nearly double the number completed in number two state Michigan.

The highest foreclosure inventory is held in Florida (7.9 percent), followed by New Jersey (6.2 percent), New York (4.9 percent), Maine (4.0 percent) and Connecticut (3.9 percent).