Pending sales of US homes fell by 14 per cent in May, compared with last year, in a sign that potential buyers believe that house prices have further to fall.

The volume of American homes for sale, that had been agreed but not completed, declined by 4.7 per cent in May, compared with April when pending sales bucked the recent trend and rose by 7.1 per cent.

The decline was the biggest in the south, where pending sales in May were 7.1 per cent below April’s figure, according to the National Association of Realtors.

The headline 4.7 per cent fall beat the consensus forecast of 3 per cent and suggests that would-be buyers are holding off on purchases in the expectation that prices will fall further.

The data, considered a key barometer of the housing market because it relates to deals in the pipeline, comes two weeks after the S&P/Case-Shiller index showed that the average US house price fell by 15.3 per cent in the year to April.

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