WASHINGTON DC, — United States  A now-expired homebuyer tax credit and low mortgage rates helped boost sales of previously occupied homes in April. The improvements aren’t likely to last.

The tax credit is now gone. And economists caution that Americans are facing so many financial obstacles that falling rates alone won’t be enough to lift the housing market.

“Although mortgage rates have fallen sharply, the combination of high unemployment, heavy indebtedness and tight credit suggest to us that demand will stumble,” said Paul Dales, an economist at Capital Economics.

Sales of previously owned homes rose 7.6 per cent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said Monday.

The sales increase sparked a rise in home prices. The median price for a new home rose to US$173,100, up four per cent from a year ago.

Mortgage rates fell last week to the lowest level for the year. The average rate on a 30-year loan ticked up slightly to 4.87 on Monday, according to financial publisher HSH Associates. That was just above the record low of 4.83 per cent last December,

Worries over the European debt crisis have sent investors rushing into the safety of US government bonds, whose yields affect some mortgage rates.

Rates had been expected to rise after the Federal Reserve ended a mortgage-buying program that pushed rates down to record lows last year. But the uncertainty in Europe has helped drive rates down for anyone who’s closing a home purchase or looking to refinance. Rates on 30-year home loans are generally tied to the yield on 10-year Treasury bonds

Still, Americans with adjustable rate mortgages could see slightly higher rates. About 70 per cent of such loans reset based on the London Interbank Offered Rate. That’s the rate large international banks use when extending short-term loans to each other. This rate has been rising because of the turmoil in Europe. It’s still well below year-ago levels.

In a healthier economy, extraordinarily low mortgage rates would pump up demand for homes. But economists say the job market is too weak and credit too tight.

“Having a good mortgage rate helps affordability, but we’ve had low mortgage rates for a long time now and sales have stayed below five million, except when the tax credit was involved,” said Patrick Newport, an economist at IHS Global Insight.

The tax credit’s impact is expected to linger for a couple of months. Buyers had to have a signed sales contract by April 30. But they have until the end of June to complete their sales. First-time buyers were eligible for a tax credit of up to US$8,000. Current owners who bought and moved into another home could qualify for a credit of up to US$6,500.

The annual rate of home sales remains 20 per cent below its peak in September 2005. But it’s 27 per cent above the bottom, set at the start of last year.

The big question facing the housing market is what happens now that the government’s tax credits have expired.

“What really matters right now is consumer confidence and job growth and home prices not going down much from here,” said Josh Levin, a homebuilding analyst at Citigroup Inc. “That really matters a lot more than rates.”

Even with April’s rise in sales, the market is saturated with homes and growing. It would take 8.4 months to sell all the homes on the market at last month’s sales pace. By contrast, a healthy supply would take six months to sell.

The number of homes on the market is expected to grow further as banks put more foreclosed properties up for sale.

“With supply growing and demand expected to fade, it is a bad picture for prices,” wrote Tim Quinlan, an economist with Wells Fargo Securities.