A new CoreLogic report says that residential shadow inventory — the number of homes in or near foreclosure (and likely to be on the market soon) — dropped in July from a year ago.

Currently, there’s about five-month supply of ‘shadow’ property (about 1.6 million units); in July 2010 there was a six-month supply (about 1.9 million). In fact, the level of shadow inventory has been dropping since April, and is down 22% from its peak in January 2010, when there was an 8.4-months’ supply.

According to the company, the decline is simply a result of delinquencies being slower than sales.

The shadow inventory accounts for 29 percent of the combined shadow and visible inventories:

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And here how the shadow inventory breaks down:

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Click here to read the full release.