The “shadow inventory” of unlisted bank-owned homes and potential foreclosures increased to 2.1 million units in August, up 10% from one year earlier, according to new estimates from CoreLogic, a real-estate research firm.
That’s around eight months of supply, compared to a five-months’ supply one year ago.
By contrast, the inventory of all unsold homes listed for sale totaled 4.2 million units in August, unchanged from one year ago. Together, that means the visible and shadow supply of homes stood at around 6.3 million in August, or around 23 months of supply at the current sales pace.
Mark Fleming, chief economist at CoreLogic, says that weak housing demand “is significantly increasing the risk of further price declines in the housing market.” Delays in the foreclosure process, including those brought on by banks’ inability to file the proper legal paperwork, threaten to exacerbate that trend.