Though home resales in May bounced back after April's decline, the National Association of Realtors still concludes that the hot housing market may be cooling.

The rebound prompted the trade group to revise its forecast of resales this year to 4.53 million units, from 4.35 million. But the group said resales would "fluctuate slightly with a gradual slowdown."

If sales in 1998 hit the projected level, they would be 7.5% higher than last year's record for existing-home sales of 4.22 million.

Forecasters have been scrambling to catch up with the market's surprising strength all year. Last week Frederick E. Flick, vice president of economic research at the trade group, attributed May's heavy sales to low mortgage rates, plentiful jobs, and the confidence-building effects of the bull stock market.

The 30-year mortgage rate in early April, when borrowers likely applied for loans to finance home sales closed in May, averaged 7.12%, according to HSH Associates, a mortgage research firm in Butler, N.J. Rates have been a few basis points lower in recent weeks.

Keith Gumbinger, vice president at HSH, said the stability of interest rates, along with their low levels, has spurred home sales, because it has given homebuyers ample opportunity to pull together the complex transactions.

"In a time of great (interest rate) volatility, you have to be a very opportunistic homebuyer," Mr. Gumbinger said. But when rates are stable, you have more time to line up all your ducks-the down payment, the right home, and the best loan package, he said.

The ease with which borrowers can find credit, he said, has also contributed to the buying boom. With the proliferation of loans that exceed a home's value, subprime loans, and zero-down-payment loans, "borrowers of almost every ilk can find funds," Mr. Gumbinger said.

The Mortgage Bankers Association's purchase applications index, a leading indicator of home sales, rose all spring.

Judging by that index, "we'll get a strong existing-home sales number in June, and July will be even stronger," said the MBA's chief economist, David Lereah. The slowdown, if it comes, will be in the fall, he said.

Though the Realtors expect July to be a strong month, Mr. Flick said sales would have to be significantly higher than usual for July's seasonally adjusted annual pace to exceed March's record of 4.8 million units.

July is traditionally when resales hit their annual peak as families wrap up a process, often begun in the spring, in time for school openings in August.

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