We bought fewer homes in May than in April according to the National Association of Realtors which finds that sales of previously occupied homes dropped 1.5 percent.

"I don't believe the job market is having an impact at this point," said Walter Maloney of the National Association of Realtors. "The problem has been two-fold. Housing shortages have been building all year and tight credit is holding back first-time buyers. So, not only are they having a tough time finding a home and when they do, they have trouble getting a mortgage. They should be about 40 percent of the market and they're only about 34 percent and they're competing with the cash investors in those lower price ranges."

"It's always been tough for first-time buyers to come up with down-payment and closings costs and right now the lending criteria is so much tighter than it should be and that is keeping the market for being as strong as it could be," said Maloney.

Sales have risen 9.6 percent from a year ago, evidence that home sales are slowly improving. Still, the pace has fallen since nearly touching a two-year high in April and it remains well below the six million that economists consider healthy.

"Even with the decline, the market has moved notably higher with eleven consecutive months of gains over the same month a year ago," said Maloney. "We are seeing a recovery despite these excessively tight credit conditions and higher down-payment requirements and those are partially negating the impact of record high housing affordability conditions."

"When you look at home sales In the northeast, things are broadly balanced between buyers and sellers. Month to month sales were down 4.8 percent, still well above a year ago, up 7.3 percent. The median price in the northeast is up 3.8 percent, which is a more representative price gain than the national price which is up almost eight percent," said Maloney. "We did not get the normal seasonal upturn that usually occurs in the spring. So, the result is there are broad based shortages of inventory in the low price ranges, except in the northeast. You also have a lot of existing owners who don't necessarily have to sell just yet, and they're watching a slow recovery. Prices are picking up and they're looking to gain back a little more of the equity that they've lost in recent years."