WASHINGTON, May 11 (Reuters) - U.S. existing home sales increased less than expected in April, and could struggle to gain altitude as mortgage rates remain elevated and rising inflation squeezes household budgets.

Home sales rose 0.2% last month to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said on Monday. Economists polled by Reuters had forecast home resales would rise to a rate of 4.05 million units.

"Despite mixed macroeconomic signals, including a record-high stock market and historically low consumer confidence, home sales were modestly boosted by the continued improvement in housing affordability," said Lawrence Yun, the NAR's chief economist.

Existing home sales are counted at the closing of a contract. Last month's sales likely reflected contracts signed in February and March.

The average rate on the popular 30-year fixed-rate mortgage dropped to 5.98% in late February before jumping to 6.38% by the end of March, data from Freddie Mac showed. Mortgage rates increased in response to rising inflation, stoked by the U.S.-Israel war with Iran. The 30-year fixed rate, which vaulted to 6.46% in early April, averaged 6.37% last week.

Consumer prices surged in March, posting their biggest annual increase in nearly two years. The government is expected to report on Tuesday that the Consumer Price Index jumped 3.7% on a year-over-year basis in April, a Reuters survey of economists predicted, which would be the largest gain since September 2023.

The NAR's housing affordability index increased to 110.6 in April from 101.4 a year ago. The median existing home price last month rose to $417,700, up 0.9% from a year ago.

Home sales increased in the South and Midwest regions. They fell in the West and were unchanged in the Northeast. Overall sales were flat compared to a year ago in April.

The inventory of existing homes increased 5.8% to 1.47 million units, remaining well below pre-pandemic levels. Supply was up 1.4% from a year ago.

At April's sales pace, it would take 4.4 months to exhaust the current inventory of existing homes, up from 4.3 months a year ago. The median number of days on the market for listed properties increased to 32 from 29 a year ago.

"Inventory still remains tight," Yun said. "Multiple offers, though not as intense as a few years ago, are still occurring. At the same time, days on market are lengthening on average, implying that consumers are taking their time before making decisions."

First-time buyers accounted for 33% of sales, down from 34% a year ago. Economists and realtors say a 40% share in this category is needed for a robust housing market. All-cash sales constituted 25% of transactions, unchanged from a year ago. Distressed sales, including foreclosures, made up 2% of transactions, holding steady from a year ago.