Shadow inventory to drag housing recovery

While the nation's housing inventory has continued to show modest improvements over the past few months, a report from CoreLogic says that a severe backlog of distressed homes waiting to hit the market will act like an anchor for some future improvements.

According to the report, the "shadow inventory" of bank-owned homes or properties nearing foreclosure has grown by 10 percent over the past 12 months, and now accounts for 2.1 million homes nationwide. Those homes will continue to stock the real estate market with discounted homes - stalling a home price recovery.

"The weak demand for housing is significantly increasing the risk of further price declines in the housing market. This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time," said Mark Fleming, the firm's chief economist.

However, the effect of those distressed homes will be less severe in Texas, as the city has just a 7.3-month supply of foreclosures - compared to levels of more than 24 months in Maryland and New Jersey.

Houston foreclosures have continued to be a significant part of the local housing market, even as sales have slowed. According to the Houston Association of Realtors, foreclosures made up nearly 22 percent of October home sales in the area.