Consumers perked up a bit in April as they lowered their forecasts for inflation and worried less about the jobs market, but yet another fall in house prices underscored the challenges facing the recovery.

The overall confidence level, as measured by the Conference Board, an industry group, was still historically low.

A separate report on Tuesday showed the housing market continues to struggle as home prices fell for an eighth month in February, inching closer to an April 2009 trough.

The Conference Board, an industry group, said its index of consumer attitudes rose to a better-than-expected 65.4 in April from a revised 63.8 in March. For full details, see

Higher energy and commodity prices from the political unrest in the Middle East and North Africa have weighed on consumers lately and there has been debate over whether the price increases will be temporary. Data on Monday showed national gasoline prices at $3.88 a gallon.

This still tells me the consumer is being hampered by house values continuing to decline, high gas prices and, most importantly, the unemployment rate, said Jeff Cleveland, senior economist at LA-based money manager Payden & Rygel.

Those key things are still weighing on the consumer, that hasn't changed with one month's worth of data.

With consumers accounting for about two-thirds of the economy, investors are worried sustained high prices will stifle spending and limit economic growth.

The gauge of consumers' view of their present situation climbed to its highest since November 2008, rising to 39.6 from 37.5 the month before, while the expectations index edged up.

Despite the fall in the proportion of those who said jobs were hard to get, to 41.8 percent from 44.4 percent the month before, the longer term view was more mixed.

Consumers' expectations for inflation in the coming 12 months eased, likely a comfort for the Federal Reserve, which wants to keep interest rates low until the economic recovery is on solid footing.

The central bank is holding a two-day meeting starting Tuesday that is expected to conclude with a signal that it is in no hurry to scale back its massive support for the recovery.

The U.S. economy faces new headwinds from soaring oil prices, Treasury Secretary Timothy Geithner said on Tuesday, but he said a forecast of 3 to 4 percent growth seemed reasonable.

The consumer data gave U.S. stocks a lift, while solid earnings from bellwether companies including United Parcel Service pushed the market rally to around three-year highs.

UPS raised its 2011 outlook, though Chief Financial Officer Kurt Kuehn said in an interview the forecast was more to do with confidence in the company's execution than economic expectations.

The economy has been resilient, but we don't see things getting much stronger -- just continuing to grow moderately, said Kuehn.

HOUSING PRICES SCRAPE 2009 LOWS

Separate data on Tuesday showed the housing market continues to struggle as U.S. single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough.

The S&P/Case-Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists' median forecast for a drop of 0.3 percent.

The 20-city composite index was at 139.27, holding just a hair above its 2009 low of 139.26. Average home prices across the United States are back to levels where they were in the summer of 2003, S&P said.

Prices in the 20 cities have fallen 3.3 percent year over year, in line with expectations.

The glut of houses up for sale has kept prices low and the market has struggled to regain traction since a home buyer tax credit that helped buoy the market expired last spring.

Other data in the past week has suggested some stabilization in the market with sales of new and existing homes rising in March.

House prices are still falling due to distressed sales. But the pace of price decline is slowing so things seem to be stabilizing, said Rudy Narvas, senior economist at Societe Generale in New York.

Separately, the Federal Reserve Bank of Richmond's manufacturing index tumbled to 10 in April from 20 the month before.

(Additional reporting by Richard Leong and Lynn Adler, Editing by Chizu Nomiyama)

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