The Bergen Record reported that the Yankees are continuing discussions with Pettitte's representatives, Randy and Alan Hendricks, and are still trying to have Pettitte help open the new Yankee Stadium.
Pettitte, 36, has been reluctant to accept a one-year, $10.5 million deal because of the pay cut it represents from the $16 million he earned in each of the last two seasons.
The veteran left-hander said repeatedly last year that he wanted to be in uniform when the Yankees officially complete their move across the street to the new Yankee Stadium, and has said that he does not see himself pitching in another uniform.
Other clubs seem to agree. Astros owner Drayton McLane said Friday he did not see his club entering the stalled negotiations for Pettitte, telling The Associated Press that the Astros are "pretty well set," but "it's a long time until Spring Training."
Pettitte had checked with Dodgers manager Joe Torre earlier in the offseason to gauge his chances of reuniting out west. Torre expressed interest in having Pettitte but later said that he believed Pettitte would eventually find his way back to New York.
In 2008, Pettitte was 14-14 with a 4.54 ERA in 33 starts. The veteran has logged at least 200 innings in four straight seasons, and five of his last six. But he faltered down the stretch, going 2-7 with a 6.23 ERA over his last 11 starts -- including a victory over the Orioles in the final game at Yankee Stadium on Sept. 21.
With New York unwilling to budge from its offer in the area of $10 million, discussions have been sluggish. In the time span between the Yankees' proposal to Pettitte, the club has signed free agents CC Sabathia, A.J. Burnett and Mark Teixeira for a combined $423.5 million.
Yankees general manager Brian Cashman has said that he still has interest in Pettitte, but acknowledges that the situation is "more complicated now."
The Yankees could change direction and pursue one of the remaining free-agent hurlers like Ben Sheets, but appear more likely to choose a pitcher from within if Pettitte does not sign.
Until further notice, Cashman said, the Yankees would enter the spring selecting a fifth starter from the group of Phil Hughes, Alfredo Aceves, Ian Kennedy, Phil Coke and non-roster invitee Jason Johnson.
Bryan Hoch is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.