In May existing homes dipped 2.2% which shows that the home-buying tax credit is ending sooner than expected. The trend continued with last month’s sales falling from previous month to the adjusted annual rate or 5.66 million according to the National Association of Realtors. Most analysts who expected sales to rise expressed their concern that the real estate market could tumble even lower after the federal incentives is entirely gone.

Last months’ sales fell from the adjusted annual rate of 5 .6 6 million recorded the month before.
During the lowest level of the recession which was at 4.5 million, sales did climb 25% but they’re still down 22 percent from the peak rate of 7.25 million in September 2005.The only time a report counts in home sales is when a deal closes.

Because of the slow process in closing many transactions like in short sales, Lawrence Yun, the Realtors chief economist, said delays in the mortgage-lending process put about 180,000 potential buyers in limbo. He's unsure if they will qualify by the June 30 deadline. The trade group is pushing Congress to extend the deadline for closing a sale until Sept. 30 and for those who were all ready under contract, those lucky few have been given an extension to get them closed.

According to Joshua Shapiro, chief U.S. Economist at MFR Inc, and economic consulting firm in New York, he says the report is “a worrisome sign for what will occur in July and thereafter when the effect of the tax credit is behind us.”

It is well shared in belief that even government stimulus in the form of a tax credit isn’t enough,” to support the U.S. housing market according to Guy LeBas, an analyst with Hanney Montgomery Scott.

Here is a summary of the sales in the different markets:

The drop in May sales was led by a more than 18 percent decline in the Northeast. Sales were unchanged in the Midwest, but rose nearly 5 percent in the West and 0.5 percent in the South.

The inventory of unsold homes on the market dropped 3.4 percent to 3.9 million. That's an 8.3 month supply at the current sales pace, compared with a healthy level of about six months. The median sales price in May was $179,600, up 2.7 percent from a year earlier.

Foreclosures and short sales — in which the lender agrees to accept less than the total mortgage — made up 31 percent of sales in May. First-time buyers made up 46 percent.

This article was written by ShirLee McGarry and taken from parts of By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, AP Real Estate Writer, National Association of Realtors, and reports gathered by analysts and economists listed in reports