Shares of homebuilders rise on gov't intervention

Builders have been slammed by a combination of falling home prices, soaring foreclosures and an oversupply of unsold homes languishing on the market. But the industry is growing hopeful that consumers will finally take advantage of deeply discounted prices, and government action to stabilize the financial system is likely to help the battered sector.

Shares of Horsham, Pa.-based luxury builder Toll Brothers led the gains, rising $1.49, or 6 percent, to $26.44. Shares of Denver-based MDC Holdings Inc. rose $2.63, or 6.4 percent, to $43.66, while shares of Fort Worth, Texas-based D.R. Horton Inc. added 84 cents , or 6.2 percent, to $14.45.

Treasury Secretary Henry Paulson says mortgage giants Fannie Mae and Freddie Mac will step up their purchases of mortgage-backed securities to help provide support to the crippled housing market.

Paulson also said Friday that the Treasury Department will expand a program, announced earlier this month, to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis. Government actions to resolve the crisis are likely to cost hundreds of billions of dollars.