A recent report by the National Association of Realtors indicates that the market may be stabilizing, due to an increase in the May index of pending home sales.

The Pending Home Sales Index gathers information on pending sales of existing homes. It increased 1.3% for May, yet remains 10.1% lower than May of 2005.

Pending sales are defined as contracts with signatures that have not reached closing yet. They are usually closed within one to two months of the signing of the purchase contracts.

NAR's Chief Economist David Lereah says the index shows signs of moderation in the market.

"The slight change in pending home sales indicates the market is beginning to level out," he explained. "This is consistent with our forecast, which is showing a landing for the housing sector.

"We are entering the second phase of the transition period from the housing boom, in which sellers are becoming more realistic about their expectations. Sales are stabilizing and annual home price appreciation is returning to historic norms."

The index in the South was down 1.7% when compared to April's levels. The Northeast also saw a decline for the month of 0.6%. Pending sales were up in the Midwest by 0.6% and in the West by 9.9%.

Many economists and industry insiders have predicted that the housing market will not collapse, it is simply leveling out after years of record highs in sales and prices. The index supports the idea that the market will stabilize, as predicted, and not bust. Some areas across the country have experienced steep drops in sales and even home price depreciation. Other areas are experiencing increased sales and moderate appreciation. Most insiders agree that the market may be turning to, in general, a buyer's market.