UPDATE 2-U.S. lumber higher as home tax credit nears end

* Home buying seen up as tax-credit nears end

* Improved home building seen as weather improves

* Seasonal demand going into best period of the year

(Recasts, updates prices, market activity to close)

By Jerry Bieszk

CHICAGO, March 18 (Reuters) - Chicago Mercantile Exchange lumber futures ended higher on Thursday after surging as much as the daily limit in early trade, as investors expected a rush to order new homes before a government tax credit ends.

A federal tax credit for first-time home buyers ends April 30 and investors were buying lumber futures on expectations that home builders will see a rush of demand before the deadline.

Home building is the largest user of lumber and any change in home demand can affect lumber prices.

CME May lumber 2LBK0 rose the $10.00 daily limit to $285.60 per tbf before slipping late on profit taking to close up $5.90 at $281.50 per tbf. July 2LBN0 ended up $4.80 at $293.80 after also trading up the $10.00 limit earlier.

Home buyers "have to close by the end of June so that means there is going to be a lot of construction between April and June to fill that," said Brian Leonard, lumber analyst with Rosenthal Collins.

"That's why these guys still need to buy - because there are still jobs out there you need wood for," he said.

Leonard noted that there was little wood moving out of lumberyards until recently when the weather improved. He said yards also were seeking to buy replacement wood.

Industry monitor Random Lengths quoted cash spruce at $280 per thousand board feet on Wednesday, unchanged from Friday and up $3 from last week.

Expectations are for cash prices to possibly be quoted higher on Friday, when Random Lengths updates that price.

"We have the strongest seasonals coming into play right now," said Robin Cross, broker with FC Stone. "The three- and five-year average were up every year for basically the next four weeks."

Cross noted recent housing reports were not that friendly, but the futures market is looking ahead to better housing.

He said the current weak housing situation is not expected to last. "We're looking for the market to work higher going forward through the spring." (Reporting by Jerry Bieszk; Editing by David Gregorio)