Shadow housing inventory shrinks

June 23, 2011|By Bloomberg News

NEW YORK — About 1.7 million homes were in the foreclosure process and expected to be put on the market as of April, down 18 percent from the peak, as fewer loans entered delinquency and more distressed homes sold, a real estate information company said.

CoreLogic Inc. said the so-called shadow inventory represented a five-month supply at the current sales pace. The inventory’s size is a barometer of market health because foreclosed homes sell for lower prices and falling values discourage buying, said Sam Khater, CoreLogic’s chief economist.

Mortgage delinquencies fell to 8.32 percent in the first quarter, down from a record 10.1 percent the same period last year, according to the Mortgage Bankers Association.

Foreclosures and short sales, in which the lender agrees to a sale for less than the balance of the mortgage, accounted for 31 percent of existing-home sales in May and 37 percent in April, the National Association of Realtors said Tuesday. The share is about 5 percent in a healthy market, Khater said.

There was a 9.3-month supply of homes listed for sale at the annual sales pace of 4.81 million in May, down from a peak of 12.5 months in July of last year, the group reported.

Foreclosure filings fell to their lowest pace in almost four years in May as banks delayed processing defaults while they rework documentation procedures following claims they improperly seized homes, according to RealtyTrac Inc.