WASHINGTON (Bloomberg) - Consumer spending in the US probably rose in May by the most in six months as the government's tax rebates gave households the means to overcome soaring fuel bills, economists said before reports this week.

Spending increased 0.7 percent, the most since November, according to the median estimate of economists surveyed by Bloomberg News. Other figures may show home sales were the third-lowest on record and property values kept dropping, signaling no end to the real-estate recession.

Americans did not hoard the rebate money last month or use it just to pay for gasoline, indicating rising unemployment and declining home equity have yet to spark a need to save. Federal Reserve policy makers, meeting this week, are projected to keep interest rates unchanged as concern over inflation mounts and anxiety over the immediate prospects for growth wanes.

"Spending has increased because of the rebate cheques, and there's more to come," said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. "Fed officials have stepped up the rhetoric on inflation."

Consumers used some of the almost $50 billion in rebates received through May to fill up their autos' gasoline tanks and purchase groceries, clothing and electronics. Retail sales jumped one percent last month, twice as much as forecast, government figures showed.

The Commerce Department's June 27 report on spending will also include figures on purchases of services, such as utilities and medical care, not tracked by retail sales. It may also show personal income rose 0.4 percent in May following a 0.2 percent gain the prior month, according to the Bloomberg survey.

The bulk of the tax rebates will probably be spent from July through September, giving third-quarter growth a lift, before the economy decelerates again in the last three months of the year, according to the median estimate of economists polled by Bloomberg earlier this month.

"After the rebate impact fades, we expect weak consumer fundamentals to cause spending to soften significantly," said Joseph LaVorgna, chief US economist at Deutsche Bank Securities in New York.

Best Buy Co., the largest US electronics retailer, last week said first-quarter profit fell 6.8 percent as consumers bought less profitable video games and laptop computers. Purchases of flat-panel televisions also contributed to a 13 percent increase in sales, the Richfield, Minnesota-based retailer also said.

"It is very early in what we still expect to be a volatile year for the consumer," chief financial officer Jim Muehlbauer said on a June 17 conference call with analysts and investors.

The spending increase will reinforce Fed Chairman Ben Bernanke's assessment this month that "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so." He also pledged to "strongly resist" any surge in consumers' inflation expectations.

The central bank's rate decision is due June 25. Investors almost universally project the Fed will keep the benchmark rate unchanged at two percent, according to futures trading.

Meanwhile, the housing contraction shows no letup. The Commerce Department may report on June 25 that new-home sales fell to an annual pace of 512,000 in May, close to a 17-year low, according to the survey median.

The following day, the National Association of Realtors may report purchases of existing houses rose in May to an annual pace of 4.96 million, the survey median showed. April's 4.89 million rate was the lowest since records began in 1999.

Weak demand is depressing prices. The S&P/Case-Shiller index of property values in 20 US metropolitan areas was probably down 15.9 percent in April from a year earlier, the most since records were first published in 2001, the survey showed. The report is due on June 24.

The government's revised figures for the first-quarter growth, due on June 26, may show the economy grew at a 1 percent annual rate, up from the 0.9 percent estimated last month, according to the Bloomberg survey.

On June 25, the Commerce Department may report durable goods orders were unchanged in May. Excluding demand for transportation equipment, which tends to be volatile, bookings likely fell 0.9 percent, indicating companies are cutting back as demand softens.