U.S. existing home sales climbed in March as Americans rushed to take advantage of a tax credit for home buyers, but activity remained severely depressed from levels preceding the country's sharpest housing downturn in modern history.

Sales rose 6.8 percent to an annual rate of 5.35 million units, the National Association of Realtors said on Thursday. Forecasters in a Reuters poll had been looking for a more subdued 4.6 percent increase.

The nationwide median home price was only slightly higher than a year earlier at $170,700. Many economists see activity in housing as key to any recovery, particularly given the sector's crucial role in driving the country into its worst recession in 70 years.

The supply of available homes stood at 3.58 million units, or 8.0 months.

(Reporting by Melissa Bland, Pedro da Costa and Nancy Waitz; Editing by James Dalgleish)