The latest report on nationwide shadow inventory from CoreLogic says that the supply of yet to be sold, off-market homes fell to 14.8 percent in April compared to the same time last year, bringing supplies down to the lowest levels since the fall of 2008. The 1.5 million shadow units represent a supply of four months, down from the six months’ supply at this time last year.  

At the moment, the flow of newly delinquent properties is being matched by the amount of REO and distressed sales being snapped up by investors, the report says, curtailing a build-up in supply.

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

Of the 1.5 million properties currently in the shadow inventory just under half, or 720,000 units, are seriously delinquent, that is more than 90 days behind in their payments but not yet in foreclosure. A little over half of the remainder, 410,000 units, are in some stage of foreclosure and 390,000 are already REO.

The states which were hardest hit by the housing crash have seen the most substantial reductions in shadow inventory. The number of seriously delinquent properties declined the most in Arizona (-37.0 percent), California (-28.0 percent), Nevada (-27.4 percent), Michigan (-23.7 percent) and Minnesota (-18.1 percent).