Homebuilders' shares jumped Wednesday a day after the government reported that the new home inventory fell to a five-month low, a necessary adjustment to eventually buoy the slumping market.

Miami-based Lennar Corp. led the sector, climbing $1.04, or about 9 percent, to $12.08. Red Bank, N.J.-based Hovnanian Enterprises Inc. followed, rising 50 cents, or almost 8 percent, to $6.90.

The Commerce Department said Tuesday that the supply of homes at the July sales pace dropped to 10.1 months in July, from 10.7 months in June. While still high, experts say continued decreases in inventory will help to balance the market.

The report also showed sales of new homes rose last month, but still fell short of economists' expectations, and home prices continued to sink.

Dallas-based Centex Corp.'s shares added 89 cents, or 6 percent, to $15.16 in afternoon trading. Shares of Fort Worth, Texas-based D.R. Horton Inc. increased 61 cents, or 5.6 percent, to $11.56, while Atlanta-based Beazer Homes USA Inc. rose 34 cents, or 5.6 percent, to $6.41.

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