BOSTON — American homebuilder shares rose, led by Standard Pacific Corp., D.R. Horton Inc., and Ryland Group Inc., the largest seller of new homes for first-time buyers, as mortgage rates fell to a 10-month low.

The Standard & Poor’s homebuilding index rose 15.02, or 2.1%, to 726.03 at 4:05 p.m. Standard Pacific gained 4.4% after it said orders rose and cancellations fell. D.R. Horton shares added 3.4% and Ryland increased 3.3%.

The average American rate for a 30-year fixed mortgage fell to 6.14% last week, down from a 2006 peak of 6.8% in July and the lowest since January, according to Freddie Mac, the no. 2 mortgage buyer. Applications for loans to purchase homes rose to a seven-month high, the Mortgage Bankers Association said yesterday. Earlier this year, housing forecasters including MBA, predicted borrowing costs would rise through 2006 and 2007.

“The rally thus far has already occurred sooner than many expected, and we believe the group is about to accelerate its ascent,” an analyst at Citigroup Inc., Stephen Kim, said yesterday in a note to clients. Mr. Kim raised target prices for 13 homebuilders, including D.R. Horton Inc., Lennar Corp., and Toll Brothers Inc.

The Mortgage Bankers Association’s index of applications rose 8.1% to 647.6, the highest since the week ended January 20, from 599 the prior week. The group’s index of refinancing rose 14% to 1989.7, while its gauge of home purchases gained 4.9% to 426.6, the highest since May.

“Our October orders had seen a modest improvement,” the chief financial officer of Irvine, Calif.-based Standard Pacific, Andrew Parnes, said at the New York Society of Security Analysts homebuilders conference in New York yesterday. Order cancellations were in the “low 40% range” in October and November, compared with 50% in the company’s third quarter, he said.

Toll Brothers Inc., the largest American builder of luxury homes, on Tuesday reported a 44% plunge in net income in the three months ended October 31. Chief Executive Officer Robert Toll said demand is improving in some regions.

“We may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above,” Mr. Toll said in a statement.

Some housing experts are cautioning the housing market’s bottom has not yet been reached.

“I see a trough coming in the first half of 2007,” the chief economist at Freddie Mac, Frank Nothaft, said in remarks at yesterday’s homebuilding conference. “We’re about two-thirds through the correction in the housing sector.”

The new-home market last hit bottom in 1991, when sales plunged 25% in three years to 509,000. Mr. Kim, of Citigroup, said the current rally in homebuilder stock is similar to the pre-bottom rally of 1990.

“A year before earnings actually bottomed the stocks began a dramatic rally that, over the next fifteen months, drove returns of 250 percent,” Mr. Kim said in his note to clients.

The homebuilders index has gained 29% in the past three months and 11% in the past week.

Fixed rates have been falling for most of the last four months, after reaching a 2006 high of 6.8% during the week ended July 21, according to Freddie Mac data.