PREVIEW-US May existing home sales seen up, new sales down

* WHAT: National Association of Realtors May existing home sales

* WHEN: Tuesday, June 22, 10 a.m. (1400 GMT)

* WHAT: Commerce Department May new home sales

* WHEN: Wednesday, June 23, 10 a.m. (1400 GMT)

* WHAT: Federal Housing Finance Agency house price index for April

* WHEN: Tuesday, June 22, 10 a.m. (1400 GMT)

REUTERS FORECASTS

* U.S. existing home sales seen rising about 6 percent to an annual rate of 6.12 million units in May from 5.77 million units the previous month. Forecasts from 67 economists ranged from 5.20 million to 6.35 million units.

* U.S. new home sales seen falling about 19 percent to an annual rate of 410,000 units in May from 504,000 units the previous month. Forecasts from 67 economists ranged from 330,000 units to 530,000 units.

FACTORS TO WATCH

Home sales data for May, one of the most active months for housing, will provide key insight into how the sector fared after the April 30 expiration of popular home buyer tax credits. While economists and housing experts almost universally agree the tax credits front-loaded home sales, a glimpse into just how much was siphoned from future sales will be reflected in the data.

Sales of existing homes in April rose 7.6 percent to a five-month high. Sales of newly built single-family homes were even more robust in April, jumping 14.8 percent to an almost two-year high.

To take advantage of the tax credits, buyers had to sign purchase contracts by April 30 and close on the sales by June 30.

Existing home sales are counted when the sales contract close, which is why they are expected to rise through June. when the tax credit ends. Sales of new homes are counted when contracts are signed, so sales in May and beyond are expected to be hurt by the tax credit expiration.

Home sales now have to find a level supported only by underlying fundamental factors, which remain weak. Lending standards are tight and many homeowners are "underwater" on their mortgages, with their homes worth less than the outstanding balance on the mortgages.

Despite historically low mortgage rates and high affordability, the sector remains highly vulnerable to setbacks, with a flood of foreclosures in the pipeline and high unemployment seen weighing heavily.

Meanwhile, a key gauge of home prices, the Federal Housing Finance Agency's index, will also be released on Tuesday, The FHFA index tracks the purchase price of homes backed by mortgages owned or guaranteed by Fannie Mae and Freddie Mac. FHFA showed prices of U.S. single-family homes rose in March for the first time since November, but fell in the first quarter. The FHFA's house price index rose a seasonally adjusted 0.3 percent in March.

The Mortgage Bankers Association, in its latest weekly survey, showed demand for loans to purchase a home, a tentative early indicator of home sales, rose for the first time in six weeks, after reaching a 13-year low. Refinancing demand also rose. The MBA will release its next survey on Wednesday.

Freddie Mac on Thursday will release its latest weekly survey on U.S. mortgage rates, which last week showed them holding steady at or near record lows.

MARKET IMPACT

Financial markets have already factored in a tepid recovery for the U.S. housing market. Existing home sales account for a much larger share of the market than new home sales, but both indicate key housing market trends. New home sales play a significant role in the economy and contribute to economic momentum through consumer purchases of furniture and appliances.

Much weaker-than-expected home sales data could send Treasury prices higher and stocks lower as it could portend a weaker economic recovery. Significantly stronger-than-expected data could cause the opposite reaction.

A strong housing market is bullish for the stock market because the ripple effect of housing to consumer durable purchases spurs corporate profits. In particular, robust data on new homes sales could send home builder stocks higher.

Improvement in the housing market bodes well for the U.S. economy, as it points to better demand in the sector where the first signs of the latest recession took root. (Reporting by Julie Haviv; Editing by Leslie Adler)