According to a recent report conducted by Standard & Poor's the nation's shadow inventory decreased between the first and second quarter of the year.
In the first quarter, according to the report, it would have taken banks 52 months to purge the nation's shadow inventory through foreclosure sales, mortgage modifications and other measures. However, between April and June, inventory fell to 47 months worth of supply.
In addition, S&P's report revealed the dollar value for non-agency loans – those not backed by Freddie Mac, Fannie Mae or the Federal Housing Administration – declined from $433 billion during the first quarter to $405 billion in the second.
"It's good news that things are starting to slow down and we're getting closer to the end of the problem," said Diane Westerback, managing director of Global Surveillance Analytics for S&P. "It could mean a gradual recovery for the market."
According to the report, these declines received aid from the stabilizing liquidation rates and a reduced number of delinquent borrowers. Tighter lending standards during the last several years has also contributed to these declines.
However, S&P still explained the housing market has a long way to go before recovering. Analysts estimate that between 4 and 5 million homes, including those with agency-backed loans, are still in shadow inventory.