The housing market got more evidence that it's on the road to recovery Thursday with new data showing a sharp decline in "shadow inventory," or seriously delinquent homes that have not yet been listed for sale.
According to a report from CoreLogic (CLGX), 1.7 million homes in January were still lurking in the wings as "shadow inventory" vs. 2.2 million in the same month a year earlier, a decline of nearly 23%.
The value of January's shadow inventory was down $70 billion from a year ago to $254 billion, the report said.
Meanwhile, the number of homes in some stage of foreclosure was down 35% nationwide in February vs. a year earlier, to 752,000 from 1.2 million.
Completed foreclosures, or the number of homes lost to foreclosure, fell 15% in February from last year's same month to 43,000. Since September 2008, when the financial crisis began, 4.9 million homes have been lost to foreclosure.
"Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories," stated Mark Fleming, CoreLogic's chief economist.
Such distressed, pending-supply inventory, when it hits the market, typically sells at substantial discount, often dragging down values nearby.
Every state, Fleming said, showed "double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory.
The stock of seriously delinquent homes and the foreclosure rate "are back to levels last seen in the final quarter of 2008," added Anand Nallathambi, CoreLogic's CEO.
Sates with the highest number of completed foreclosures in the 12 months ending in February were Florida (118,000), Michigan (50,000), Texas (39,000), California (37,000) and Georgia (34,000), CoreLogic said. These states accounted for nearly half of all completed foreclosures nationally.
Shadow inventory has been falling at an average monthly rate of 41,000 units, CoreLogic said.
Florida continued to have the most distressed inventory, with 15% of the nation's distressed properties as of January, the report said. Florida, California, New York, New Jersey and Illinois carried 42% of all distressed properties in the U.S. that month.
After $7 trillion in housing wealth was wiped out during the housing downturn, property owners have made back $4 trillion in the last two years, said Lawrence Yun, chief economist of the National Association of Realtors, in a blog this week.
But with $3 trillion still to be made up, he said the housing market is still in "recovery mode" rather than in "expansion mode."