* House sales fall at slowest pace in 11 months
* Follows improvement in March mortgage lending
*
(Adds analyst comment, context)
By Andrew Hay
MADRID, May 12 (Reuters) - Spanish house sales fell at the slowest pace in 11 months during March, the National Statistics Institute reported on Tuesday, marking the latest data to suggest Spain's severe recession may be easing.
Home sales fell 24.3 percent to 34,895 in March in what was the 13th straight month of decline, but well below rates of 37.5 percent in February and 38.6 percent in January, INE reported.
The March result was the slowest rate of decline since April 2008 and followed Bank of Spain data showing banks lent 7 billion euros in March for mortgages, the most since July 2008.
Economists expected the sales trend to continue as real estate firms and banks repossess homes due to soaring debt defaults and put them on the market at ever lower prices.
"It's not that things are improving, there's just less deterioration," said economist Carlos Maravall at the AFI consultancy. "We've had a very sharp fall in terms of house sale numbers and what remains to be seen is a price fall."
March housing results were flattered by the statistical impact of a sharp, 39 percent fall in March 2008 sales and the fact Easter fell in March last year.
But they mirrored data showing a slowdown in the rate of decline in April service and manufacturing sector activity, as measured by the Markit Economics Purchasing Managers' Index.
Spain's Socialist government last week said it saw green shoots of economic recovery after Spanish consumer confidence hit a year high in April as new jobless claims rose at their slowest pace in nine months.
The International Monetary Fund expects Spanish house prices to fall 30 percent from peak to trough and estimates Spain is around half way through that process. (Reporting by Andrew Hay; Editing by Chris Pizzey)