California-based CoreLogic reported today that the national residential shadow inventory as of July fell to 2.3 million units, representing a supply of six months.

This was a 10 percent drop from July 2011, when shadow inventory stood at 2.6 million units.

"Broadly speaking, the shadow inventory continued to shrink in July," Anand Nallathambi, president and CEO of CoreLogic, said in a statement. "The reduction is being driven by a variety of resolution approaches. This is yet another hopeful sign that the housing market is slowly healing."

"The decline in shadow inventory has recently moderated reflecting the lower outflow of distressed sales over the past year," added Mark Fleming, chief economist for CoreLogic. "While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time."

Of the 2.3 million properties currently in the shadow inventory, 1 million units are seriously delinquent (2.9 months’ supply), 900,000 are in some stage of foreclosure (2.5-months’ supply) and 345,000 are already in REO (1.0-months’ supply).

Five states – Florida, California, Illinois, New York and New Jersey – made up 45 percent of all distressed properties in the country as of July.

CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure and held as real estate owned (REO) by mortgage servicers but not currently listed on multiple listing services (MLSs).