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Homebuilding shares rebounded from moderate losses Thursday, as worries about the

Federal Reserve

raising interest rates abated somewhat late in the session.

After falling in the morning,

Hovnanian

(HOV) - Get Hovnanian Enterprises, Inc. Class A Report

finished up 24 cents, or 0.33%, to $73.43,

Toll Brothers

(TOL) - Get Toll Brothers, Inc. Report

rose 14 cents, or 0.36%, to $38.80, and

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Lennar

(LEN) - Get Lennar Corporation Class A Report

advanced 38 cents, or 0.87%, to $44.09.

"

The earlier action was the result of fear over higher interest rates," said John Kasprzak, an analyst at BB&T Capital Markets.

While the Fed left interest rates at 1%, their lowest level in more than 40 years, the bank removed language from its statement that had indicated it would remain on hold for a "considerable period."

Late in the session, investors digested minutes from the Fed's December meeting, at which it discussed dropping "considerable period," but also added that "for the near term, however members saw substantial benefit in maintaining an unchanged policy stance and considerable risk in taking preemptive action that could prove to be unneeded against potential inflation, with associated costs to economic performance."

Fed fears had initially rattled interest-rate sensitive sectors, with housing stocks particularly hard hit as they have kept up a three-year rally. The S&P Homebuilding Index rose 78% in the past 12 months, with components recently trading near the high end of a six to 10 times earnings historical trading range.

"We have seen some of the multiples come back toward the lower end," said Kasprzak. After reaching a peak valuation of 9.6 times 2004 earnings forecasts at the end of December, Hovnanian shares are currently valued at 7.8 times this year's Thomson First Call estimate of $9.36 a share.

Toll Brothers was lately trading at 9.3 times a 2004 prediction for earnings of $4.16 share, and Lennar is getting 8.45 times this year's consensus estimate of $5.20 a share.