By Lynn Adler

NEW YORK(Reuters) - Americans applied to buy homesat the highest pace last week since May, but more than 8 ofevery 10 loan requests was for a refinancing, Mortgage BankersAssociation data show on Wednesday.

August employment and July pending home sales surpassedforecasts and could portend a rise in deeply depressed homesales, economists said.

Still, about 82 percent of all loans last week were forrefinancings rather than purchases, with unemployment stillhigh at 9.6 percent and the U.S. housing market groping for abottom.

Total loan requests fell by a seasonally adjusted 1.5percent last week, as refi demand dropped 3.1 percent from thehighest levels since May 2009. Home purchase applications rose6.3 percent.

Home buying demand climbed back to levels seen in late Maybut stayed almost 40 percent lower than a year ago, saidMichael Fratantoni, MBA's vice president of research andeconomics.

"On the other hand, refinance volume dropped last week forthe first time in six weeks, but the level of applications torefinance remains close to recent highs, as historically lowmortgage rates continue to draw borrowers into the market," hesaid in a statement.

Fixed 30-year mortgage rates hovered just above the lowestrates since the MBA started record keeping in 1990, rising 0.07percentage point last week to 4.50 percent.

Home buyer tax credits that ended in April pulled summerbuyers into spring months and applications swooned once theincentive ceased.

"Low mortgage rates cannot cure all that ails the housingmarket," said Greg McBride, senior financial analyst atBankrate Inc. in North Palm Beach, Florida.

"The job market does not inspire much confidence, buyers nolonger have the incentive of the tax credit, people continue tohave trouble selling their existing homes and some believeprices have further to fall," he said.

Unemployment or underemployment, lack of home equity inexisting houses and a shortage of money for a downpaymentremain among the main impediments to home buying.

An owner refinancing a $300,000 30-year mortgage taken outin June 2009 at 6 percent, meantime, can cut her monthlypayment by almost $280 by going to a 4 1/2 percent loan,according to Bankrate.

"At the household level, that's additional spending powerand breathing room in the monthly budget," said McBride. "Butrefinancing is encumbered by upside down and unemployedhomeowners."

Lower borrowing costs should translate into more consumerspending but the economic impact would be greater if more homeowners met the criteria.

"Lower interest rates have spurred another round ofrefinancing activity and that should bode well for consumptionspending," said Michael Gapen, senior U.S. economist atBarclays Capital in New York.

"Longer term, however, the housing market still facessignificant headwinds and one of those main headwinds is thefact that not every homeowner can access these lower mortgagerates," he added.

Barclays looks for the housing market to find its floor inthe third quarter and start to rebound modestly by the firstquarter of next year. But prices could still erode by up to 7percent over the 12 months, pressured mainly by foreclosures.

(Editing by Chizu Nomiyama)