Editor’s Note: This item is republished with permission from Inman News. View original article "Shadow inventory drops to lowest level in nearly 3 years."

Paralleling a decline in for-sale inventory, shadow inventory looming over the U.S. housing market hit its lowest level in nearly three years in April, according to a report from real estate data aggregator CoreLogic.

Shadow inventory was down 14.8 percent year over year in April to 1.5 million units. That's a four-month supply, down from six months in April 2011 and about the same level as in October 2008.

Meanwhile, unsold inventory of non-distressed active listings fell to 6.5 months in April—a more than five-year low.

"Since peaking at 2.1 million units in January 2010, the shadow inventory has fallen by 28%. The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices," said Mark Fleming, CoreLogic's chief economist, in a statement.

"This is one of the reasons why some markets that were formerly identified as deeply distressed, like Arizona, California and Nevada, are now experiencing price increases."

CoreLogic defines shadow inventory as properties seriously delinquent by 90 days or more, in the foreclosure process, and those that have finished the foreclosure process and become REO (real estate owned) but have not yet been listed for sale.

The dollar volume of shadow inventory fell about 9% in April, to $246 billion—a three-year low. Of the 1.5 million units comprising the nation's shadow inventory, 720,000 are seriously delinquent, 410,000 are in some stage of foreclosure, and 390,000 are unlisted REOs, CoreLogic said.

Serious delinquencies fell most in Arizona (-37%), California (-28%), Nevada (-27.4%), Michigan (-23.7%) and Minnesota (-18.1%), CoreLogic said.

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