The number of U.S. homes that could soon come onto the market fell to the lowest in more than three years as of July as distressed sales offset new delinquencies in an encouraging sign for the housing market, a data analyst firm said on Tuesday.
The pending supply of homes, also known as shadow inventory, fell to 2.3 million units as of the end of July, down 10.2 percent from 2.6 million units a year ago and at the same level as March 2009, CoreLogic said. The July data is the most recent available.
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Shadow inventory includes the number of properties that are seriously delinquent or behind with loan payments, in foreclosure or held by lenders and servicers but not currently listed on the market. At the end of July it was equal to about six months' supply, CoreLogic said.
While many economists believe the housing market has finally turned a corner as prices have stabilized, the sector still faces many challenges including the swollen pipeline of foreclosures that need to be absorbed by the market.
A decline in shadow inventory should help the nascent recovery as fewer properties coming onto the market means less downward pressure on prices.
"Broadly speaking, the shadow inventory continued to shrink in July," Anand Nallathambi, chief executive of CoreLogic said in a statement. "This is yet another hopeful sign that the housing market is slowly healing."
Of the properties in shadow inventory, one million homeowners were 90 days or more behind on their mortgage payments, considered to be seriously delinquent. As well, 900,000 homes were in some stage of foreclosure, and 345,000 had already been seized by the banks.
The dollar volume of shadow inventory was $382 billion, down from $397 billion a year ago.
CoreLogic revised its methodology for the report and updated previous figures.
(Reporting by Edward Krudy; Editing by James Dalgleish)