UPDATE 1-MDC Holdings quarterly loss narrows

* Q3 loss/shr $0.37 vs loss/shr $2.55 yr ago

* Quarterly net orders up 52 percent

* Outlook still cautious

Oct 30 (Reuters) - Homebuilder MDC Holdings Inc (MDC.N) posted a narrower quarterly loss amid early signs of recovery in the housing market, and said net orders increased for the second consecutive quarter.

The company, however, said its outlook remains cautious because of the employment situation and the overall uncertain state of the economy.

For the third quarter, MDC posted a net loss of $32.0 million, or 69 cents a share, compared with $118.0 million, or $2.55 a share, a year ago.

Total revenue fell 44 percent to $203.2 million.

The third-quarter net loss included a pre-tax charge of $1.2 million for asset impairments and an $11.8 million increase in deferred tax valuation allowance, MDC said in a statement.

Analysts on average were expecting earnings of 37 cents a share, before special items, on revenue of $228.3 million, according to Thomson Reuters I/B/E/S.

"During the third quarter, an increasing national unemployment rate overshadowed an improvement in overall homebuilding industry conditions," Chief Executive Larry Mizel said.

U.S. housing starts rose 0.5 percent in a seasonally adjusted annual rate of 590,000 units in September, while jobless rate climbed to 9.8 percent. Unemployment is expected to hit 10 percent in the first quarter of 2010.

MDC Holdings' net orders for the quarter rose 52 percent to 1,016 homes, while cancellation rate for the period fell to 23 percent from 46 percent. Homebuilding revenue fell to $200.0 million.

Shares of the company fell 2 percent at $33.27 in morning trade Thursday on the New York Stock Exchange. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Pradeep Kurup) ((ananthalakshmi.as@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: ananthalakshmi.as.reuters.com@reuters.net))