US STOCKS-Wall St dips as housing data disappoints

* Dollar Tree (NasdaqGS: DLTR - news) offers to buy Family Dollar; deal valued at $9.2 bln

* June pending home sales unexpectedly fall

* S&P 500 about 1 percent from intraday record

* Dow off 0.2 pct; S&P 500 down 0.2 pct;, Nasdaq off 0.4 pct (Updates to midday)

By Ryan Vlastelica

NEW YORK, July 28 (Reuters) - U.S. stocks slipped on Monday as weak data on the housing market and services sector gave the latest indications that economic conditions were getting worse, taking the S&P 500 below a key support level.

While acquisition activity limited the market's decline and kept the Dow and S&P 500 near record levels, investors found few reasons to buy because the data followed some high-profile disappointments in earnings, including from Amazon.com (NasdaqGS: AMZN - news) and Caterpillar (NYSE: CAT - news) last week.

An index of pending home sales unexpectedly fell 1.1 percent in June, according to the National Association of Realtors. The report followed a drop of 8.1 percent in June new home sales, the biggest slump in almost a year. The PHLX housing sector index slid 1.8 percent. Shares (Frankfurt: DI6.F - news) of D.R. Horton Inc , the No. 1 U.S. homebuilder, tumbled 2.9 percent to $20.98.

Activity in the U.S. services sector stayed at its highest level in 4-1/2 years in July, though readings for new business and employment growth weakened, according to financial data firm Markit (NasdaqGS: MRKT - news) 's preliminary data.

"This isn't the first soft data point we've gotten on housing recently, which suggests the sector is decelerating, a real discouragement," said Liam Dalton, president of Axiom Capital Management Inc in New York. "The data suggests it is time to be cautious over the idea of a robust economy."

Later this week, data on second-quarter U.S. gross domestic product and the July nonfarm payrolls report will be released.

The Dow Jones industrial average fell 28.1 points or 0.17 percent, to 16,932.47. The S&P 500 lost 4.14 points or 0.21 percent, to 1,974.20. The Nasdaq Composite dropped 16.90 points or 0.38 percent, to 4,432.66.

With the day's move, the S&P 500 fell below its 14-day moving average, a level that had served as support on Friday. The benchmark index remains less than 1 percent away from an all-time record reached last week.

In the latest deal news, Dollar Tree Inc offered to buy rival Family Dollar Stores Inc (NYSE: FDO - news) in a transaction that valued the acquired company's assets at about $9.2 billion. Zillow Inc (NasdaqGS: Z - news) agreed to buy Trulia Inc (NYSE: TRLA - news) for $3.5 billion in stock in a deal that would combine the two most popular U.S. real estate website operators.

Family Dollar's stock jumped 23.8 percent to $75.11 and ranked as the S&P 500's biggest percentage gainer while Dollar Tree gained 3.1 percent to $55.92. Trulia added 13.4 percent to $63.88 while Zillow fell 2.1 percent to $155.56.

Cummins Inc (NYSE: CMI - news) , the U.S. maker of engines and other vehicle components, raised its full-year revenue outlook, citing improved North American demand; still, its stock dropped 3.6 percent to $144.73.

El Pollo Loco Holdings Inc, a restaurant chain that went public late last week, extended the rally from its trading debut on Friday. The stock surged 22.8 percent to $29.50. (Editing by Jan Paschal)