(Adds governments measures in third paragraph.)

June 10 (Bloomberg) -- Spanish home sales declined the most in almost two years in April as the highest unemployment rate in Europe and the end of a tax rebate discouraged buyers.

The number of transactions fell 29.7 percent from a year earlier, after an 11.9 percent drop in March, the National Statistics Institute in Madrid said today. That was the steepest decline since May 2009.

Spain, which has a 21 percent unemployment rate after a three-year slump, is working through an excess of 1 million homes left unsold by the collapse of a debt-fueled construction boom. To clear the backlog, the government scrapped a tax rebate on mortgage payments and gave buyers a year’s warning before doing so to encourage them to bring forward purchases.

The decision prompted a surge in home sales through most of 2010 and the first two months of 2011 as buyers hurried to purchase properties and lock in a tax break of as much as 1,352 euros ($1,957) a year.

Spain’s recovery from an almost two-year recession is being led by exports as households rein in spending to pay down debt. The deepest austerity measures, including public wage cuts and a freeze on pensions, are also undermining consumer spending.

--Editors: Jennifer M. Freedman, Eddie Buckle

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net