Pending sales of existing U.S. homes bounced back from a seven-month low in May, but demand for home loans sank last week and the market continues to struggle under the weight of a glut of unsold properties.

The National Association of Realtors said on Wednesday its Pending Home Sales Index increased 8.2 percent to 88.8, bouncing back from April’s seven-month low. Pending homes sales lead existing homes sales by a month or two.

The rise in contracts is merely a correction after an 11.3 percent decline in April, leaving a picture intact of a housing market that continues to bounce along the bottom.

That fact was underscored by a Mortgage Bankers Association report, which showed applications for loans to buy homes dropped 3 percent last week to the lowest level since Feb. 25.

“Although today’s number could bring some cheer to investors who are on the prowl for good news, the fact of the matter is that the housing sector is still a long way from a meaningful recovery,” said Peter Buchanan, a senior economist at CIBC World Markets in Toronto.

Economists had expected home resale contracts to rise only 3.8 percent after a previously reported 11.6 percent drop.

U.S. stock indexes were slightly higher, while bond prices were mostly lower. The dollar was down against a basket of currencies.

The weak housing market is constraining economic growth and economists do not see a recovery any time soon in a sector that is grappling with an oversupply of homes, which is keeping prices subdued.

According to the Realtors, there were 3.72 million used homes on the market in May, excluding the so-called shadow inventory.

Data on Tuesday showed a moderation in the pace of decline in single-family home prices in April.

The S&P/Case-Shiller composite index of single-family homes in 20 metropolitan areas slipped 0.1 percent on a seasonally adjusted basis after falling 0.3 percent in March.

Last month, pending home sales increased in all four regions, with the Midwest and West notching double-digit gains. In the 12 months to May, pending home sales rose 13.4 percent.

(Reporting for Reuters by Lucia Mutikani; Editing by Neil Stempleman)