Economists say weak data from the housing sector is hardly new, but with little economic news from the U.S. this week, markets may pay attention.

"Weak housing data would certainly send a message that the economy is not as strong as some think, especially the banks. But it would take a pretty big drop to distract investors from the weakness in commodities," said Chris Low, chief economist from FTN Financial.

Lehman Brothers economists are looking for a 1% advance to a 5.05 million pace of sales in the month, yet they said the index is likely to fall another 5% before bottoming out in September.

Economists from JPMorgan also look for a second month of gains to put the pace at 5.01 million, which they said would be the fastest sales rate since February. "If our forecast is realized, existing home sales will have been roughly stable for the last three quarters," they wrote in a client note.

Forecasts for existing homes are often based on the U.S. pending home sales index, which tracks sales that have been signed but not finalized - a process that takes another month or two, thereby offering a prediction for the following month's pace of existing home sales.

The existing home sales index jumped 7.1% in the April report, which suggests existing sales could see a boost this month, yet they fell back 4.7% in May. The noisy data contributes to the variance of forecasts for Thursday's report, which range from from a low of 4.78 million units to a high of 5.10 million.

Sales were down 15.9% from a year ago in the last report, which was also the third consecutive month the pace was below the 5 million mark. Despite the increase in May's headline, single-family unit sales - which represent four-fifths of the market - improved to a pace of 4.41 million, up from 4.34 million in the previous month.

Paul Ashworth, senior U.S. economist from Capital Economics, said existing home sales "are being boosted by the unprecedented increase in sales of foreclosed homes."

He said that in areas most affected by the housing slump, foreclosures account for up to 40% of all sales. "Under those circumstances, we take very little comfort from the fact that existing home sales look to have stabilized."

The national median existing home price was $208,300, up from the previous month's $201,200 but marking a 6.3% decline from the same time a year ago.

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it

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