Existing home sales slide in May

To qualify for the tax incentive, contracts had to be signed before the end of April and, right now, closings need to be completed before June 30. Congress is trying to provide an additional three months for homebuyers to close on their purchases because of a backlog. 

The focus for the next several months will be on ensuring that homebuyers in the pipeline are able to complete their purchases. 

"Approximately 180,000 homebuyers 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," Yun said. 

"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."

Although the housing market continues to limp along, even with help from the federal government, sales of existing homes in May were up 19.2 percent compared with May 2009. 

In addition, the median sales price for an existing home increased 2.7 percent to $179,600, from $174,800 in May 2009. 

With unemployment and foreclosure levels still holding too high, there is growing concern that the housing market will take a tumble in the summer as consumers avoid big purchases. 

The inventory of existing homes dropped 3.4 percent to 3.89 million, which would take 8.3 months to sell at the current pace. A six-month inventory is representative of a strong market. 

Meanwhile, Federal Reserve policymakers begin a two-day meeting today and are expected to keep interest rates near zero for the time being.