A National Association of Realtors index that tracks pending home sales increased slightly from April to May but dropped 10.1 percent below the May 2005 index.

The Pending Home Sales Index climbed from 111.9 to 113.4 from May to April, a 1.3 percent gain, the association reported.

The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed; pending sales typically are finalized within a month or two of signing.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales, the Realtor trade group reported.

The trade group reported that the rise in May, which followed three consecutive months of decline, is “an indication that the market is stabilizing.”

Regionally, the PHSI in the South was down 1.7 percent in May compared to April, and was 7.3 percent below the May 2005 index. In the Northeast, the index was down 0.6 percent from April to May and was 7.8 percent below a year ago. The index in the Midwest was up 0.6 percent to 100.9 in May but was 13.6 percent lower than May 2005. The index in the West rose 9.9 percent to 110.1 in May but was 12.9 percent below a year earlier, the association reported.

David Lereah, chief economist for the Realtor association, said in a statement, “The slight change in pending home sales indicates the market is beginning to level out. We are entering the second phase of the transition period from the housing boom, in which sellers are becoming more realistic about their expectations — sales are stabilizing and annual home-price appreciation is returning to historic norms.”

The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, the association demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months.

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