REO inventory declined at an accelerated pace in 2012 as investor activity intensified, but the impact of the reduction has been uneven across markets, according to an analysis from CoreLogic.

In the data provider’s March MarketPulse report, economist Sam Khater explained markets in the Midwest and Northeast are still struggling with REO inventory, while the South and Southwest are seeing “massive” declines.

According to CoreLogic, the five markets that have experienced the biggest declines are Phoenix, Las Vegas, Oakland, Riverside, and Sacramento.

The decline suggests an increase in investment activity from both individual and institutional investors, with different contributions from the investor types. The report categorized entities that purchased five or more properties a year using the same name as institutional investors.

According to CoreLogic, individual investors reached a trough of about 10,000 monthly purchases in 2009, and eventually grew their transactions to more than 50,000 units by late fall 2012. Individual investor activity has also contributed to declines in California markets such as San Diego, Oakland, and Riverside.

On the other hand, cities such as Atlanta, Las Vegas, and Phoenix have seen a high share of institutional investors and a rapid rise in institutional activity. In Phoenix, the share of institutional investors increased from 16 percent in 2011 to 26 percent in 2012. Without coincidence, those three markets also had the largest percentage of declines in REOs in 2012, the report stated.

As individual and institutional investors scooped up REO inventory, prices for REOs also increased in the targeted markets. Out of the 16 markets tracked by CoreLogic, Phoenix saw the biggest increase after prices rose 37 percent over a one-year period, followed by a 30 percent increase in Las Vegas.

In the Midwest, however, REOs are elevated, with cities such as Minneapolis and Chicago seeing less interest from individual and institutional investors, the report noted.