UPDATE 2-Higher selling price drives KB Home's profit, shares jump

* Posts first-quarter profit vs loss a year earlier

* Average selling price up 12 percent

* New home orders rise 6 percent

* KB Homes, other homebuilders shares rise

(Adds details, analysts' estimate, share price)

March 19 (Reuters) - KB Home, the fifth-largest U.S. homebuilder, reported a better-than-expected quarterly profit as a shortage of ready land to build on helped it increase selling prices, sending its shares up as much as 10 percent in morning trade.

The news sparked a rally in the stocks of U.S. homebuilders, with a 4 percent rise in the shares of No.3 Lennar Corp -- which is due to report first-quarter results on Thursday.

KB Home said on Wednesday its overall average selling price rose 12 percent in the first quarter ended Feb. 28, with the West Coast outpacing the Southwest, Central and Southeast regions.

The Los Angeles-based homebuilder, like its peers, is expected to benefit from a recovering U.S. economy as buyers become more confident and adjust to the higher interest rates.

In January D.R. Horton Inc, the No. 1 U.S. homebuilder, reported its best ever first-quarter since 2006 on higher selling prices and said it expected a "very strong" spring selling season - traditionally the strongest quarter for builders.

KB Home's net income was $10.6 million, or 12 cents per share, in the first quarter compared with a loss of $12.5 million, or 16 cents per share, a year earlier.

Analysts on average were expecting a profit of 8 cents per share, according to Thomson Reuters I/B/E/S.

New home orders, a key indicator for builders who do not book revenue on a house until the sale is completed, rose 6 percent to 1,765 units.

The company's overall deliveries fell 3 percent to 1,442 homes in the quarter. While deliveries in the Southwest, Central and Southeast regions rose, deliveries slumped 32 percent in the West Coast, due to a lower backlog at the start of the quarter.

KB Homes's backlog rose 4 percent to 2,880 homes as of the end of the quarter.

Shares of the Los Angeles-based company were trading up 9 percent at $19.25 in morning trade on the New York Stock Exchange.

(Reporting by Sweta Singh in Bangalore; Editing by Savio D'Souza)