Home prices dipped in April from March, though the pace of decline moderated at the start of the spring buying season, a closely watched survey said on Tuesday.

Even so, economists cautioned house prices will likely continue to crawl along at low levels, and could have further to fall, as the battered housing market works through an excess amount of houses for sale, ongoing foreclosures, tight credit and weak demand.

The S&P/Case-Shiller composite index of single-family homes in 20 metropolitan areas dipped 0.1 percent on a seasonally adjusted basis. A Reuters poll of economists had forecast a decline of 0.2 percent.

On a non-seasonally adjusted basis, however, the index rose 0.7 percent, its first advance in eight months, the report said.

The seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer home buying season, David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement.

It is much too early to tell if this is a turning point or simply due to some warmer weather.

There was little reaction in financial markets to the data.

It suggests that the housing market is stabilizing. It suggests that things are bottoming out, and it is only a matter of months before you hit the bottom, said Rudy Narvas, senior economist at Societe Generale in New York.

Things aren't great but at least they are not completely falling apart.

The 20-city composite index edged up at 138.84 from 138.16 in March, which had marked a new crisis-era low.

Prices in the 20-city index fell 4 percent year over year, slightly worse than expectations for a drop of 3.9 percent.

U.S. home prices were supported last spring by a tax credit, but the housing market has struggled since the credit expired. While housing makes up a fraction of gross domestic product, most economists say the economy will be hard pressed to make a sustainable recovery without an improvement in housing.

(Reporting by Leah Schnurr, additional reporting by Chris Reese; Editing by Padraic Cassidy)

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