CORRECT: Home Builders Soar On Fed Action;Builder Index Jumps

Shares of home builders rose Wednesday following news the Federal Reserve Board is moving to add liquidity to the housing market by raising the size of a lending program aimed at mortgage-backed securities by another $750 billion.

Investors see the move as a way to help potentially thaw the current home lending freeze and boost anemic sales if mortgage rates - currently hovering above 5% - dip.

The Dow Jones U.S. Home Construction Index jumped nearly 10% before retreating slightly, led by Hovnanian Enterprises, (HOV) whose shares climbed more than 40% to $1.35. Beazer Homes USA (BZH) followed with a gain of nearly 19%, trading at 89 cents.

"That could be very good news for us," said Brent Anderson, vice president of investor relations for Meritage Homes Corp. (MTH), whose shares jumped 13% to $13.02. "Lower rates translate to lower payments, which are what buyers are looking for today."

Home builders, struggling to survive the worst downturn in decades, have repeatedly asked the government for assistance lowering rates.

It might not have happened as quickly as they wanted, but conventional conforming 30-year, fixed-rate mortgages will likely be around 4 5/8% with one point Thursday, according to Thomas Lawler, a housing economist based in Leesburg, Va.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; [e-mail]