The so-called shadow inventory of residential property increased 10 percent year-over-year, according to a report released today by CoreLogic.
As of August, there were 2.1 million units, representing eights month of supply, of shadow inventory, up from 1.9 million units, or five months of a supply, a year ago.
“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,” the company said in a release.
CoreLogic estimates its shadow inventory, sometimes referred to as pending supply, by adding up properties that are seriously delinquent (90 days or more behind in mortgage payments), in foreclosure, or owned by mortgage lenders but not currently listed on multiple listing services (MLSs).
These properties typically don’t show up in official numbers released by the Census Bureau and other outlets, meaning housing supply is worse than it looks.
And the visible months’ supply increased to 15 months in August, up from 11 months a year earlier due to the decline in sales volume during the past few months (expiration of homebuyer tax credit).
Now the total visible and shadow inventory stands at 6.3 million units, up from 6.1 million a year ago.
As a result, 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 supply is considered normal, meaning current inventory is roughly three times the norm.
Translation: Continued downward pressure on home prices.