Even as Los Angeles County’s median home price continued to break records in May, the number of homes sold often a leading indicator of a looming market correction continued to drop.

The $550,000 countywide median price for existing homes in May was 16 percent higher than a year earlier and 1 percent higher than the previous month, according to data provided to the Business Journal by HomeData Corp., a Mellville, N.Y. company that tracks housing prices nationwide.

Even so, clouds are on the horizon.

There were 8,949 homes sold last month, 17 percent fewer than a year ago. And the 35,558 homes sold to date this year is off 15 percent from the first five months of 2005.

The drop in sales volume has contributed to an accumulating inventory of available homes which are staying on the market longer. The California Association of Realtors estimates that as of April, homes in L.A. County were staying on the market a median 35 days, compared to 25 days a year ago. There was 5.6 months of inventory in the overall Los Angeles market in April, compared to just two months’ worth a year ago.

Six months worth of inventory is generally considered a balanced market for both buyers and sellers. A hot topic among real estate professionals at a statewide CAR meeting in Sacramento last week centered on the challenges of convincing sellers to lower their expectations.

“We’ve transitioned to a slower market,” said Leslie Appleton-Young, the association’s chief economist. “But you’ve got a situation where sellers are still tied to prices that would have been appropriate a year ago, when inventory was significantly lower.”