[[Update 1: Corrects ....share of underwater mortgages declined from 25.2% in 4Q of 2012 to 4Q of 2011]]

The number of underwater borrowers is down from late 2011, but housing is far from on the mend, the Obama Administration said Thursday.

In the administration's August Housing Scorecard, the report shows the number of upside-down borrowers falling 11% from late 2011 to the second-quarter of 2012.

CoreLogic data incorporated into the Treasury department's scorecard puts today's underwater borrower population at roughly 10.8 million, compared to 12.1 million in the fourth quarter of last year.

Overall, the share of underwater mortgages declined from 25.2% in 4Q of 2011 to 22.3% in the most recent housing scorecard.

Home prices also managed to rise for three consecutive months based on reports from the major home price indices produced by Standard & Poor's, the Federal Housing Finance Agency and CoreLogic.

The average home price in 2Q hit $142,200, up from $139,000 in 1Q and $141,500 last year, according to data cited from the S&P Case-Shiller home price indices.   

"With median sales prices the highest they’ve been since the earliest months of the administration, underwater borrowers down by 11%  since the end of last year and more than half a million refinances through our enhanced Home Affordable Refinance Program so far this year, it is clear that we’re making progress," said HUD acting assistant secretary Erika Poethig. "But with so many households still struggling to make ends meet, we have important work ahead. That is why we are asking the Congress to approve the president’s refinancing proposal so that more homeowners can receive assistance."

Home inventory levels also fell from year ago levels with the market now containing a 6.4-month supply of existing homes, down from 9.3-months a year earlier, according to National Association of Realtors data cited by the government.

New and existing home sales also improved from last year, with 31,000 new homes sold in the most recent scorecard period, up from 24,800 a year earlier, HUD and the Census Bureau reported.

Existing home sales also rose to 372,000 units in the most recent quarterly report, up from 337,500 units a year earlier, according to NAR data cited by the scorecard.