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UPDATE 3-Harvey claims second fatality as floodwaters rise in Texas

* Woman killed in flooding in Houston

* Widespread flood risk from tropical storm Harvey

* Hit Texas as Category 4 hurricane late Friday

* Buildings damaged, towns flooded on coast (Changes dateline to Houston, adds report of body in street)

HOUSTON, Texas, Aug 27 (Reuters) - Rescue crews raced against rising floodwaters early on Sunday to pull hundreds of stranded residents from their homes and cars in southeast Texas as Harvey, the most powerful storm to hit the state in more than 50 years, roared inland.

The storm has killed at least two people and Harris County Sheriff Ed Gonzalez said on Twitter the death toll could rise, with his deputies responding to reports of a deceased woman and child inside a submerged vehicle on Interstate 10 near Houston.

One resident described seeing a woman's body floating in the streets during a flash flood in the same western part of the city. The flash floods were several feet high, the resident told local TV station abc13.

Houston's William P. Hobby Airport cancelled all inbound and outbound flights early on Sunday due to standing water on the runway. The airport said its arrivals area was flooded, and the National Weather Service issued a flash flood alert for the surrounding area.

The second confirmed fatality from Tropical Storm Harvey came on Saturday evening as an elderly woman attempted to drive through flooded streets on Houston's west side, said Sergeant Colin Howard of the Houston police department.

"It appeared that her vehicle went into high water and she drowned as a result," he said. The victim was not immediately identified.

Authorities have urged residents to stay off the streets of Houston and other southeast Texas cities as rain falling at up to 5 inches per hour flooded roads and major intersections.

On Friday night, a man died in a house fire in the town of Rockport, 30 miles (48 km) north of Corpus Christi. Another dozen people in the area suffered injuries including broken bones, another official said.

The Harris County Joint Information center said first responders were conducting hundreds of rescues early on Sunday morning.

Gonzalez' Twitter feed was inundated by residents asking for help. The sheriff could only tell some of them that crews were doing the best they can.

"All agencies care but everyone simply operating at maximum capacity," he tweeted at one point.

Harvey slammed into Texas late Friday as a Category 4 hurricane with winds of 130 miles per hour (210 km per hour), making it the strongest storm to hit the state since 1961.

It has since lingered over the state, dumping amounts of rain that threaten to break the record established nearly 40 years ago when Alvin, Texas, was deluged by 43 inches of rain in 24 hours from July 24-25, 1979.

The storm ripped off roofs, snapped trees, triggered tornadoes and flash floods and had cut off power to nearly 230,000 people on Saturday night. Houston police officials said officers were evacuating two flooded apartment complexes.

Oil and gas production was largely halted in the state, prompting price hikes at the pumps.

"There are a number of stranded people on our streets, calling 911, exhausting needed resources. You can help by staying off the streets," Houston Mayor Sylvester Turner said on Twitter.

'IT WAS TERRIBLE'

Harvey was downgraded to a tropical storm on Saturday but was expected to lash Texas for days as it heads inland, according to the National Hurricane Center (NHC), which described the forecast for the state as potentially "catastrophic."

The coastal town of Rockport took a direct hit from the storm, leaving streets flooded and strewn with power lines and debris on Saturday.

A dozen recreational vehicles were flipped over on a sales lot, one blown into the middle of the street. A convoy of military vehicles arrived in the Rockport area on Saturday to help in the recovery efforts, and town officials announced an overnight curfew for residents.

"It was terrible," resident Joel Valdez, 57, told Reuters. The storm ripped part of the roof from his trailer home at around 4 a.m., he said as he sat in a Jeep with windows smashed by the storm. "I could feel the whole house move."

Before the storm hit, Rockport's mayor told anyone staying behind to write their names on their arms for identification in case of death or injury. A high school, hotel, senior housing complex and other buildings suffered structural damage.

Texas Governor Greg Abbott said he was activating 1,800 members of the military to help with the statewide cleanup, while 1,000 people would conduct search-and-rescue operations.

The Texas Department of Criminal Justice said it was forced to evacuate about 4,500 inmates from three state prisons near the Brazos River because of rising water.

20 RESCUED AT SEA

The U.S. Coast Guard said it had rescued 20 people from distressed vessels on Saturday, and was monitoring two Carnival Corp cruise ships carrying thousands of people stranded in the U.S. Gulf of Mexico.

Harvey was a Category 4 hurricane on the Saffir-Simpson scale when it hit the coast, the second-highest category, and the most powerful storm in more than a decade to come ashore anywhere in the mainland United States.

Authorities warned of the potentially life-threatening impact of heavy rains between Houston and Corpus Christi over the next several days, with the latest forecast saying Harvey could loop back toward the Gulf of Mexico coast before turning north again on Tuesday.

"This rain will lead to a prolonged, dangerous, and potentially catastrophic flooding event well into next week," the National Weather Service said.

The size and strength of Harvey dredged up memories of Katrina, the 2005 hurricane that made a direct hit on New Orleans as a Category 3 storm, causing levees and flood walls to fail in dozens of places. About 1,800 died in the disaster made worse by a slow government emergency response.

U.S. President Donald Trump, facing the first big natural disaster of his term, signed a disaster proclamation on Friday. He met with his cabinet and staff on Saturday to discuss the federal reaction to the storm, according to a White House statement.

Several refiners shut down plants ahead of the storm, disrupting supplies and pushing prices higher. More than 45 percent of the country's refining capacity is along the U.S. Gulf Coast, and nearly a fifth of the nation's crude is produced offshore in the Gulf of Mexico. (Additional reporting by Liz Hampton, Ernest Scheyder, Marianna Parraga, and Ruthy Munoz in Houston; Jessica Resnick-Ault, Jarrett Renshaw, Taylor Harris, Devika Krishna Kumar, Sophia Kunthara and Chris Michaud in New York; Timothy Gardner in Washington, D.C. and; Dan Whitcomb in Los Angeles; Writing by Dan Whitcomb and Simon Webb; Editing by Mark Potter and Andrew Heavens)