Real estate data provider CoreLogic (CLGX) said 1.8 million properties make up the shadow inventory of foreclosures, down 11% from one year ago. Analysts consider the shadow inventory as the major force against a recovery in the U.S. housing market. It is made up of mortgages in at least 90-days delinquency, in foreclosure or already repossessed by the lender as REO. These properties continue to drag down home prices, forcing more borrowers underwater and ultimately into default. Standard & Poor’s recently put the principal balance remaining on the shadow inventory at $450 billion. The 1.8 million homes represent a nine-month supply of inventory. Healthy real estate markets usually hold a six-month supply. Of the shadow inventory, nearly half are in some stage of serious delinquency. The rest is split almost evenly between properties in foreclosure or REO. (Click on charts to expand.) CoreLogic said while some portion of the shadow inventory can be carved away through modification or short sale, “only a small share can be effectively remediated from the shadow supply,” leaving the rest for liquidation through REO. For the first time, CoreLogic studied net present value, or NPV, calculations, and expected severity and redefault rates for modifications and short sales. Analysts came to the conclusion that these loss-mitigation efforts could cut the shadow inventory in half. But communication difficulties between the borrower and the servicer could make that prediction too optimistic. CoreLogic found in addition to the shadow inventory, there are nearly 2 million mortgages that are current but underwater. The highest levels of the shadow inventory remain in New Jersey, Illinois and Maryland. While mostly lower-population states such as North Dakota, Alaska and Wyoming hold the least amount of the inventory, Texas had a notably small portion. CoreLogic Chief Economist Mark Fleming said despite the decline over the last year, the shadow inventory will linger for some time. “While the trend of the shadow inventory is improving somewhat, the current level and distressed months’ supply remain very high,” Fleming said. “The short-term weakness in prices and longer-term weakness in the drivers that affect the housing market imply that excess supply will remain high for an extended period of time.” Write to Jon Prior. Follow him on Twitter @JonAPrior.