The number of new single-family home sales rose 11.7 percent to 1,751 in May, as the median price dropped 3 percent from the previous month to $308,874.

"Part of the good news is prices went down," said Smith, president of Home Builders Research. "That's odd to say that, but people have to realize they have to meet the market demand."

He counted 2,587 existing home sales in May. That's up from 2,353 sales in April, but far below the 4,406 recorded resales in May 2006. The median resale price dipped 3.8 percent from a year ago and 2.5 percent from April to $278,000.

Given the market conditions, it might indicate that sellers, particularly investors, are finally facing reality and pricing their homes so they'll sell, Smith said. He hopes prices continue to decline, which should in turn reduce the inventory of resale listings for the good of the housing market in the long term.

Kurt Lehman of Realty One Group said home prices must fall further before sales rebound, but he doesn't know when the bottom is coming.

"Hey, maybe we're already pretty close. The number of houses selling per month is really the key to what's happening," he said. "Still, a house that someone could buy five years ago for $175,000 now is one of thousands of average resale homes that needs carpet, paint, has no exceptional landscaping and the asking price is $320,000 when most people can't afford it, especially with the tightening of underwriting by most lenders. It's going to be an economic problem until more (people) are making a lot more money and aren't afraid of buying into what appears to be a sinking home value market."

The underlying economic fundamentals remain strong in Las Vegas, but people are taking a little longer to jump into the housing market after moving here, real estate consultant Ron Rulof of Team Power Marketing said.

"I've been trying to get down to the bottom of this and figure out what people are thinking. They're still coming into town, but they see a little turmoil from what they've been reading so they're sitting on the sideline," Rulof said. "When I first came to Las Vegas, I rented for six to eight months before I bought a home, even though I could've bought. You want to settle in. What you have in a nutshell, because of market conditions, is they're spending a little more time renting."

Smith said the Las Vegas housing market fits the definition of a recession, but how long it lasts is the great unknown.

"Six months? A year? Two or more years? Unfortunately, nobody has that answer. In our opinion, those that continue to say by early 2008 are basing it on hopes instead of facts," he said.

If there was a historical model to evaluate the current demand trend, it would be much easier to project a timeline for the turnaround, Smith said.

However, Las Vegas is unique. It has a booming hotel and gaming industry that is projected to produce significant job growth over the next three to five years, maybe longer, and new jobs result in more housing demand, he said.