"Shadow Inventory"
Falls to 2008 Levels

 

Sustained improvement in the housing market ??" including increasing prices, lower inventories and growth for both new and existing home sales ??" is allowing lenders to bring more of their shadow inventory to market, reducing the backlog of foreclosed homes and aiding the health of the recovery.

The U.S. housing market's "shadow inventory" ??" mortgages in foreclosure or seriously delinquent, usually held by lenders and not yet for sale ??" neared a four-year low in November, as recovering demand and market conditions allow more owners to sell.

The percentage of home loans more than 90 days behind or in the foreclosure process fell to 7.03 percent in the third quarter, down from 7.31 percent in the previous three months, according to a Mortgage Bankers Association report. The rate a year earlier was 7.89 percent. The serious-delinquency rate was the lowest since the fourth quarter of 2008, when it reached 6.3 percent.

At the end of September, 2.32 million existing homes were available for sale, 20 percent less than a year earlier, according to the National Association of Realtors. That represented a 5.9-month supply, the lowest since March 2006, near the peak of the housing boom.

The decline in inventory is helping to boost home selling prices as buyers compete for properties. U.S. home prices jumped 5 percent in September from a year earlier, the biggest increase since July 2006, according to industry analyst CoreLogic Inc.

In Florida, 13 percent of loans are in foreclosure, the highest level in the nation, followed by New Jersey with 8.9 percent, Illinois at 6.8 percent and New York at 6.5 percent. The share of loans in foreclosure was 2.6 percent in California and 2.5 percent in Arizona, more than a percentage point below the U.S. average.

The overall U.S. mortgage delinquency rate, defined as loans at least one month late, fell to a seasonally adjusted 7.4 percent in the third quarter, down from 7.58 percent in the previous three months, the Mortgage Bankers Association said.