Further evidence of a federal home-buyer tax credit on the wane was delivered by the National Association of Realtors, which reported existing home sales for the month of may dropped 2.2% from April to a seasonally adjusted annual pace of 5.66 million.

Economists were expecting a gain of 5%.

While the tax credit expired April 30 for new homes, which are considered sold upon going to contract, existing homes are not considered sold until closing. Under the current tax-credit, buyers of existing homes have until June 30 to close in order to qualify for the credit. The Realtors, however, are backing a bill passed in the U.S. Senate last week that would extend that closing period until summer's end due primarily to the difficulty in closing on short sales and foreclosed properties in a short timeframe. The House has yet to take up the measure.

Though down from April, existing home sales remained 19.2% above the 4.75 million-unit level in May 2009. Meantime, the sequential comparison was made against an upwardly revised April sales figure, which moved up from a 7.6% gain to 8.0%.

Single-family home sales were down less, by1.6% to a seasonally adjusted annual rate of 4.98 million in May and were 17.5% above the 4.24 million pace of May, 2009.

Meantime, median prices rose as the share of distressed homes fell from 33% to 31% of all sales. The national median existing-home price for all housing types was up 2.7% from May, 2009 to $179,600 and from $173,100 in April. The median existing single-family home price was $179,400, also up 2.7% from May, 2009. The NAR said single-family sales were up in 18 of 20 metros compared to last May and the median single-family price was higher in 16 of 20 metros.

Existing condominium and co-op sales fell 6.8% to a seasonally adjusted annual rate of 680,000 in May, 32.6% above the 513,000-unit pace in May 2009. The median existing condo price was $181,300 in May, up 3.4 percent from a year ago.

Regionally, the national gain came almost entirely from the West, which was up 4.9% to an annual rate of 1.29 million in May, 15.2% higher than May 2009. The median price in the West was up 7.4% to $221,300.

The South was up 0.5% to a pace of 2.15 million, 22.9% above a year before.The median price in the South was up 1% to $159,000.

The Northeast was down 18.3% to an annual level of 890,000 in May from a surge in April but remained 12.7% higher than a year ago. The median price was down 2.2% year-over-year to $240,200.

The Midwest was flat with April at a pace of 1.33 million, 22% above May 2009, with the median price up 2.2% to $150,700.

The Realtors said total housing inventory at the end of May was down 3.4% to3.89 million existing homes available for sale, an 8.3-month supply at the current sales pace, down from an 8.4-month supply in April. Raw unsold inventory was 1.1% above a year ago but 14.9% below the record of 4.58 million in July 2008.

"We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings," said Lawrence Yun, NAR chief economist. "However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales ... in addition, many potential sales are being delayed by an interruption in the National Flood Insurance Program. Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance. Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues," he concluded.