Sales of previously owned U.S. homes rose more than expected in April, increasing 2.5 percent as home buyers jumped to act before interest rates rose further, a report from the National Association of Realtors (search) showed Tuesday.

Resales of homes climbed to a seasonally adjusted annual rate of 6.64 million units in April from a 6.48 million unit rate in March, the NAR said.

Analysts had been expecting a 6.45 million annual sales pace.

"You have low mortgage rates and fence jumpers that contributed to the second strongest month ever for home sales," said David Lereah, NAR's chief economist.

Inventories in April increased to 2.57 million units from 2.35 million the previous month. It was the highest since August 1990 and the second highest inventory level on record and at the current sales pace, there was a 4.6 months' supply of homes available for sale.

The median sales price of a pre-owned home rose 7.3 percent from the same month a year ago to $176,000.

Lereah said rising interest rates should slow the pace of home buying.

"We do expect, starting in May and going into June, some slowdown in sales," he said.

Buyers snapped up homes at a record pace in 2003 as mortgage rates slid to the lowest levels since the early 1960s. Rates rose toward the end of last year, but dipped again in early 2004 as worries about slow job creation undermined confidence in the U.S. economic recovery.

However, in recent weeks signs of inflation have emerged amid evidence of strong growth and a recovering labor market, leading economists to expect the Federal Reserve (search) to start raising interest rates from 1 percent -- the lowest since 1958 -- perhaps as early as its policy-setting meeting at the end of June.

Reflecting anticipated Fed action, interest rates for the popular 30-year fixed-rate mortgage rose for nine consecutive weeks before easing to 6.30 percent at the end of last week, reports by mortgage finance giant Freddie Mac (search) show.