The cost of insuring the debt of U.S. homebuilders rose on Tuesday after sales of previously owned homes dropped more steeply than expected in July to their lowers pace in 15 years.

Credit default swaps insuring the debt of KB Home jumped 68 basis points over Monday's close to 595 basis points, or $595,000 per year to insure $10 million in debt, according to Markit Intraday.

D.R Horton's CDS rose 40 basis points to 305 basis points while Lennar Corp's CDS rose 39 basis points to 535 basis points and Ryland Group jumped 38 basis points to 300 basis points. Toll Brother's swap costs also rose 32 basis points to 250 basis points and Centex Corp CTX.N increased 24 basis points to 210 basis points, Markit data show.

To see analysts reactions to the home sales figures click on [ID:nN24249690]. To see share price reaction go to [ID:nN24250859]

(Reporting by Karen Brettell;)