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UPDATE 1-Builders extend rally on increase in starts
September 21, 2010 / 2:16 PM / in 7 years

UPDATE 1-Builders extend rally on increase in starts

* D.R. Horton shares up 1.2 pct

* Homebuilder index up 1 pct vs flat S&P 500

* August starts up 10.5 pct, permits up 1.8 pct (Adds analyst quote, updates share action)

NEW YORK, Sept 21 (Reuters) - Shares of major U.S. homebuilders rose on Tuesday on positive housing data, extending a rally that started Monday after the third-biggest builder, Lennar Corp (LEN.N), reported better-than-expected quarterly results.

On Tuesday, the Commerce Department said August's housing starts increased more than expected to their highest level in four months. Permits rose 1.8 percent from July. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic click: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Single-family starts, however, rose only 4.3 percent, while single-family permits fell 1.2 percent.

That means starts will likely fall in September, according to a research note from Credit Suisse analyst Dan Oppenheim who warned of “less sanguine single-family details beneath the headlines.”

Homebuilders on average were up 1 percent, according to the Dow Jones U.S. Home Construction Index .DJUSHB, outpacing the broader market as measured by the S&P 500 index, which was flat to slightly down.

Shares of No. 1 homebuilder D.R. Horton Inc (DHI.N) were up 1.2 percent while shares of KB Home (KBH.N) were up 1.4 percent. (Reporting by Helen Chernikoff, editing by Dave Zimmerman)

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