WASHINGTON (AP) – A measurement of pending home sales fell to
the third-lowest reading on record in May as the housing markets
recovery continued to prove elusive.

The National Association of Realtorsseasonally adjusted index
of pending sales for existing homes fell 4.7 percent to 84.7 from
an upwardly revised April reading of 88.9. The index was 14 percent
below year-ago levels.


"The overall decline in contract signings suggests we are not
out of the woods by any means," NAR Chief Economist Lawrence Yun
said in a statement.

Home sales are considered pending when the seller has accepted
an offer, but the deal has not yet closed. Typically there is a
one- to two-month lag before a sale is completed.

Wall Street economists surveyed by Thomson/IFR had predicted the
index would come in at 87. The index, which sunk to a record low of
83 in March, stood at 98.5 in May 2007. A reading of 100 is equal
to the average level of sales activity in 2001, when the index
started.

Pending sales fell around the U.S., sinking the most – 7.1
percent – in the South, and the least – 1.3 percent – in the West.

Sales of existing homes edged up in May, indicating that buyers
were taking advantage of deeply discounted prices. But many
economists believe prices must drop further before the housing
industry can mount a sustained recovery.

The Realtors projects existing U.S. home sales will fall 6.1
percent in 2008 to 5.31 million, though the group expects sales to
rebound in the second half of the year.

It projects median prices – the point at which half of the homes
sell for less and half for more – will fall 6.2 percent to
$205,300. It would be the second straight year in which that
measurement has fallen nationwide.

Much of the downward pressure on prices comes from foreclosures
and so-called short sales, in which a lender accepts an offer less
than the value of the mortgage. These distressed sales can be
discounted by up to 50 percent, forcing home sellers to slash their
listing prices to compete.

"The speed at which home prices has declined in a few select
markets is unprecedented, but the large price declines in those
areas have enticed bargain hunters back into the market," Yun
said.