May pending home sales tumble without tax credits

NEW YORK (AP) — The number of buyers who signed contracts to purchase homes tumbled in May, a sign the housing recovery can’t survive without government incentives.

The National Association of Realtors said today its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May from April. The index fell to 77.6 from 110.9. May’s reading was the lowest dating back to 2001.

The index also was down 15.9 percent from the same month a year earlier.

The reading provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal.

The sharp declines were widespread. Pending sales dropped by 33.3 percent in the South, by 32.1 percent in the Midwest, by 31.6 percent in the Northeast, and by 20.9 percent in the West.

Federal tax credits helped to boost home sales this spring. First-time homebuyers could get a credit of 10 percent of the purchase price up to $8,000, while homeowners who bought and moved also could get 10 percent up to $6,500.

The deadline to get a signed sales contract was April 30.