As the approximate 2.5 million homes in foreclosure complete the process, national delinquencies will fall, and REO inventory and short sales are expected to trend upward, according to a report released today by John Burns Real Estate Consulting. There are currently 562,000 bank-owned homes and 2.5 million mortgages more than 90 days delinquent in the market. Single-family starts as well as single-family and multi-family permits were down in August, leaving total completions last month 33% lower  than July, at 587,000 units. Foreclosures grew by 4% month-over-month. Shadow inventory is inevitably growing and affecting the market already hit hard by high levels of distressed mortgages, such as Stockton, Calif. and Orlando, Fla., which have an excess supply of inventory already. According to John Burns' data, the two cities have a 27 shadow months supply of homes, 22,344 and 81,309 homes, respectively. CoreLogic reported that national home prices in July remained steady, but existing home sales decreased 2.6% in August compared to July, according to the National Association of Realtors. New home sales dropped 12% over the same period. Write to Christine Ricciardi.