In the first month that house hunters didn't have the homebuyer tax credit to entice them to sign contracts, pending sales of existing properties dropped 30%, according to the National Association of Realtors (NAR). After experiencing three periods of month-over-month increases, NAR's pending home sales index declined to a reading of 77.6 in May, down 30% from 110.9 in April. The index is down 15.9% from its May 2009 level. The index is a forward-looking indicator of future existing home sales based on signed sales contracts. An index of 100 is equal to the average level of contract activity during 2001. Despite the drop in existing sales, NAR chief economist Lawrence Yun said the now-expired tax credit contributed to stabilizing home prices. "Without the tax credit, there will be more aggressive price negotiations between buyers and sellers," Yun said. "The key test on whether the housing market can stand on its own without stimulus medicine will depend critically on private sector job creation in the second half of the year." Yun wrote Thursday that “consumers are rational and they rushed to meet the tax credit eligibility deadline in April," adding the sharp decline in contract signings in May is a "natural result." Going forward, Yun projected similar low levels of pending sales activity in June. The new subdued projections are in stark contrast to comments Yun made as recently as March. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said in March, when commenting on January's pending home sales report. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.” Contrary to his predictions, existing home sales dropped 2.2% in May, which Yun said was the result of delays in the closing process. NAR echoed that sentiment in Thursday's report. The association said up to 180,000 pending buyers missed Wednesday's deadline to close a deal and be eligible for the homebuyer tax credit. While both the House and Senate passed legislation that would extend the closing deadline to Sept. 30, as of Thursday morning, President Barack Obama has not signed it. It is unclear whether he will, and if so, if the extension would be retroactively applied to those that close after the original deadline but before the extension becomes law. As for future home sales activity, Yun now projects existing home sales that close in June will remain elevated, followed by a notable decline in July and August. “If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions,” he said Thursday. “In most areas of the country there will be no sharp snap back in home prices in the upcoming years, although some local markets have experienced double-digit gains this year." Regionally, the pending sales index took the biggest dive in the South, down 33.3% from April and are 14.4% lower than one year ago. In the Midwest, pending sales are down 32.1% from April and down 20.2% from May 2009. Pending sales dropped 31.6% in the Northeast month-over-month and are down 14.8% annually. The West declined 20.9% from April and is 15.1% below May 2009. Write to Austin Kilgore.