Shadow Inventory Jumps 10 Percent from a Year Ago

November 22 2010 (Shirley Allen)
bumpy road ahead sign
In a report released today by CoreLogic, shadow inventory of residential property as of August 2010, reached 2.1 million units. At current sales rates, that translates into an eight months worth of supply, up from 1.9 million, or a five-month’s supply, from one year earlier. With visible inventory remaining flat at 4.2 million units, the change in shadow inventory increased the total supply of unsold inventory by 3 percent.

Shadow inventory, also known as pending supply, is the number of properties that are seriously delinquent (90 days or more) that are in foreclosure and real estate owned (REO) by lenders but is not yet listed on multiple listing services (MLS’s).

According to the CoreLogic’s report, the supply of visible unsold inventory at the end of August 2010 was 4.2 million units, which matches the amount of unsold inventory from a year ago. The visible inventory measures the unsold inventory of new and existing homes that were on the market. The visible months’ supply increased to 15 months in August, up from 11 months a year earlier due to the decline in sales during the last few months.

The total visible and shadow inventory was 6.3 million units in August, up from 6.1 million a year ago. Based on the current sales rates, the total months’ supply of unsold homes was 23 months in August, up from 17 months a year ago.

Typically a reading of six to seven months is considered normal so the current total months’ supply is roughly three times the normal rate.

Tags: shadow inventory, unsold inventory, pending supply, new and existing homes, visible inventory, foreclosures