The nation's residential shadow inventory as of July declined slightly to 1.6 million units, representing a supply of five months, according to a report from CoreLogic (CLGX). That's down from 1.9 million units, a supply of six months, from a year ago, and follows a decline from April when shadow inventory stood at 1.7 million units. "The steady improvement in the shadow inventory is a positive development for the housing market," said Mark Fleming, chief economist for CoreLogic. "However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time." CoreLogic said the decline is driven by a pace of new delinquencies that is slower than the pace of the disposition of distressed assets. The company estimates the current stock of properties in the shadow inventory, or pending supply, by calculating the number of distressed properties not listed on multiple listing services that are more than 90-days deliquent, in foreclosure and real estate owned by lenders. Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.2-months’ supply), 430,000 are in some stage of foreclosure (1.2-months’ supply) and 390,000 are already in REO (1.1-months’ supply). The inventory is 22% lower than the peak in of 2 million units, or 8.4-months of supply, in January 2010. The total shadow and visible inventory was 5.4 million units in July, down from 6.1 million units a year ago. The aggregate current mortgage debt outstanding of the shadow inventory was $336 billion in July, down 18% from a year ago. The charts below show the overall shadow inventory by category and by months' supply. Click on charts to expand. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.