Pending sales of existing U.S. homes fell in May, indicating that home sales in June and July may edge lower, data released Wednesday by the National Association of Realtors (search) showed.

The Pending Home Sales Index (search), based on data collected in May, stood at 124.9, down 2.0 percent from April but 3.7 percent above the comparable month a year ago.

May's reading marks the third highest level on record, the group said, noting that the housing market remains robust.

"To put the index in perspective, we're running about 25 percentage points higher than what is considered to be historically strong," said David Lereah, the group's chief economist.

A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales will typically close within one or two months of contract signing. The Pending Home Sales Index was launched by the Realtors' group earlier this year and includes pending sales of single-family units, condominiums and co-ops.

The Pending Home Sales Index fell 5.7 percent in the U.S. Midwest, 3.3 percent in the Northeast and 1.2 percent in the South. It rose 1.6 percent in the West, according to the National Association of Realtors.

The U.S. housing sector has grown for more than four years, and has yet to show signs that a significant slowdown is on the horizon. Average home prices have surged more than 50 percent over the past five years, government data shows, and residential construction and sales continue to hold record or near-record levels.

But the double-digit rate of price appreciation in some areas, particularly parts of California and Florida as well as Las Vegas and cities along the Atlantic coast, is seen by many economists as unsustainable.

Federal Reserve Chairman Alan Greenspan (search) has warned about "frothy" local markets.

Research group IDEAglobal (search) said the lower pending home sales reading for May was at odds with a Mortgage Bankers Association report that showed increasing mortgage purchase applications.

Still, the pending sales data will likely lead IDEAglobal to modestly reduce its forecast for existing home sales for June, the group said in a note.

Existing home sales data for June is due July 25.