Sales of existing single-family homes fell 1.6% in May with the expiration of federal tax credits and problems with mortgagors obtaining flood insurance policies.

The National Association of Realtors reported that sales of previously owned single-family homes fell to a seasonally adjusted annual rate of 4.98 million units from a 5.06 million rate in April.

The homebuyer tax credit expired April 30, but buyers still have until June 30 to close and qualify for the benefit. Legislation is pending in Congress to extend the closing date into the fall. (NAR and other trade groups want a closing deadline of Sept. 30.)

NAR chief economist Lawrence Yun noted that many sales are being delayed because of an interruption in the National Flood Insurance Program.

"Approximately 180,000 home buyers who have signed a contract in good faith to receive the tax credit may not be able to finalize it by the end of June due to delays in the mortgage process, particularly for short sales," Yun said.

NAR economists expect to see one more month of elevated home sales before they start to trail off. The trade group reported that the national median existing-home price for all housing types was $179,600 in May, up 2.7% from a year ago. During the month distressed home sales slipped to 31% of all purchases, compared to 33% in April and 33% in May 2009.

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