As of September, the shadow inventory stood at approximately 1.7 million units – up from 1.1 million a year earlier, according to new estimates from First American CoreLogic.
At the current sales rate, the pending supply is 3.3 months – up from 2.4 months a year ago. The months' supply measures how quickly the inventory will run off given the current sales rate.
The visible supply of unsold inventory was 3.8 million units in September 2009, which is down from 4.7 million a year earlier. The visible inventory measures the unsold inventory of new and existing homes that are currently on the market. The visible months' supply fell to 7.8 months in September – down from 10.1 months a year earlier.
The total unsold inventory (which combines the visible and pending supply) was 5.5 million units in September, as compared to 5.7 million a year ago.
The total months' supply was 11.1 months – down from 12.7 a year earlier. This indicates that while the visible months' supply has decreased and is beginning to approach more normal levels, adding in the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years, especially in the context of the current increase in home sales, which is due, in part, to artificially low interest rates and the home buyer tax credit.Â
"We're going to be dealing with high levels of distressed [sales] in the marketplace for at least a couple of years,’ Mark Fleming, the company's chief economist, told the Associated Press. ‘It's not just all going to disappear.’