US Shadow Inventory Reaches Five-Year Low

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The overall "shadow inventory" of distressed and foreclosed properties not listed for sale in July reached its lowest level since August 2008, according to latest data from CoreLogic. 

The shadow inventory in July was 1.9 million homes, a drop of 22 percent from a year ago and down 38 percent from its peak in 2010. The shadow inventory, which some analysts believe could impact the housing recovery when the properties hit the market, represented $239 billion in homes, a 3.7 months of supply, the firm estimates.

"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," CoreLogic chief executive Anand Nallathambi said in the release. "With a year-over-year decrease of 22 percent in July, the shadow inventory has now declined steadily for 10 consecutive months."

The latest data also showed positive signs for the number of completed foreclosures. The number of homes foreclosed in the U.S. dropped 34 percent in August compared to last year. There were 48,000 completed foreclosures in the U.S. in August, down from 72,000 a year earlier and up from 47,000 the previous month. 

By comparison, prior to the housing crisis, completed foreclosures in the U.S. averaged 21,000 per month between 2000 and 2006.

"The foreclosure inventory continues to improve, as exhibited by these recent numbers," Dr. Mark Fleming, chief economist for CoreLogic, said in the release. "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."

As of August, approximately 939,000 U.S. homes were in some stage of foreclosure, down 33 percent from last year, CoreLogic reports.  

Highlights from the report:

• The five states with the highest number of completed foreclosures for the 12 months ending in August 2013 were: Florida (111,000), Michigan (60,000), California (58,000), Texas (43,000) and Georgia (40,000).These five states accounted for almost half of all completed foreclosures nationally.

• The five states with the lowest number of completed foreclosures for the 12 months ending in August 2013 were: District of Columbia (94), North Dakota (463), Hawaii (492), West Virginia (501) and Wyoming (723).

• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (7.9 percent), New Jersey (6.2 percent), New York (4.9 percent), Maine (4.0 percent) and Connecticut (3.9 percent).

• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.4 percent), Alaska (0.6 percent), North Dakota (0.7 percent), Nebraska (0.7 percent) and Colorado (0.7 percent).

• Of the fewer than 2 million properties in the shadow inventory, 874,000 properties were seriously delinquent (1.8 months' supply), 661,000 were in some stage of foreclosure (1.3 months' supply) and 318,000 were already in REO (0.6 months' supply).