A leading indicator of existing-home sales fell 3.5% in May, signaling that sales activity is continuing to slow due to a lack of buyer confidence and tighter lending standards."Some transactions are being postponed from mortgage market disruptions," National Association of Realtors senior economist Lawrence Yun said, as buyers reapply for alternatives to subprime financing. The NAR Pending Home Sales Index fell from 101.2 in April to 97.7 in May, its lowest level since September 2001. Since May 2006, the index is down 13.5%. The May PHS index is based on sales contracts that were expected to close in June and July. However, Mr. Yun said he expects home sales to stay close to present levels in the months ahead due to accumulating pent-up demand.

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