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UPDATE 2-Lennar's profit tops estimates on higher home sales, prices

* First-quarter profit $0.61/share vs est $0.51

* Average selling price rises 14 pct to $322,000

* Orders rise 8 pct

(Adds analyst comments, details on apartment rental business, updates share price)

June 26 (Reuters) - Lennar Corp, the second-largest U.S. homebuilder, reported a better-than-expected quarterly profit as it sold more homes at higher prices.

Lennar has been able to raise prices despite a choppy recovery in the U.S. housing market as it mainly caters to buyers looking for a second home who are more comfortable with volatile interest rates.

The company said average selling price rose 14 percent to $322,000 in the quarter ended May 31 amid tighter supply.

Lennar handed over 4,987 homes, a jump of 12 percent from a year earlier.

Gross margins on home sales improved to 25.5 percent as the company benefited from buying land during the downturn unlike most other homebuilders. Gross margins were 24.1 percent a year earlier.

Lennar did not have to use "greater incentives" to get sales, ISI Group analyst Steve East said. "We were worried the industry would start to move towards (that)."

But order growth for the company slowed to 8 percent, its first single-digit quarterly increase in three years, largely due to weak demand in the all-important spring selling season.

Chief Executive Stuart Miller on Thursday termed the spring selling season as softer-than-expected, but said demand would continue to outpace supply due to limited availability of land.

Orders rose to 6,183 houses in the quarter ended May 31.

Lennar, which entered the apartment rental business last year, said it expects to sell its first apartment community in the current quarter ending August.

Net income was flat at $137.7 million, or 61 cents per share, but came in above the average analyst estimate of 51 cents, according to Thomson Reuters I/B/E/S.

Lennar's profit was weighed down by losses in its real estate financing business and multi-family home business. Revenue rose 28 percent to $1.82 billion.

Lennar shares were flat at $41.76 in afternoon trading on the New York Stock Exchange.

(Reporting by Mridhula Raghavan in Bangalore; Editing by Sriraj Kalluvila)