By the end of the third quarter the estimated number of homes heading toward foreclosure but not yet included in "unsold inventory" figures reached 1.7 million, up from 1.1 million a year earlier, according to new First American CoreLogic data.

The increase in this estimate of real estate-owned by banks and mortgage companies as a result of foreclosures and other actions is affecting home sale rates and is in contrast to the shrinking visible supply of unsold inventory, which decreased from 4.7 million in the third quarter of 2008 to 3.8 units during the same period this year.

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