A larger-than-projected increase in April sales of previously owned homes was accompanied by an even bigger jump in inventories, raising the risk U.S. property values will backslide.

Purchases climbed 7.6 percent to a 5.77 million annual rate as buyers rushed to qualify for an expiring government tax credit, the National Association of Realtors said today in Washington. The number of homes on the market surged by the most in a decade, while median prices showed the biggest gain in four years.

Increasing supply, combined with mounting foreclosures and the probability that sales will retrench once a federal credit expires in June, may bring an end to the improvement in home values. Lower mortgage rates brought on by concern the European debt crisis will slow global growth may limit the damage.

Stocks fluctuated between gains and losses as Apple Inc. led a rally in technology shares, offsetting concern that Europe’s debt crisis has further to run. The Standard & Poor’s 500 Index was unchanged at 1,087.69 at 12:35 p.m. in New York. Treasury securities rose, sending the yield on the benchmark 10- year note down to 3.20 percent from 3.24 percent late in the day on May 21, The yield reached 3.10 percent that day, the lowest level in a year.

(Source: Bloomberg News)