UPDATE 2-Homebuilder PulteGroup's profit beats on higher sales, prices

(Adds estimates, Q4 gross margins, industry background)

Jan 30 (Reuters) - PulteGroup Inc reported fourth-quarter profit that beat Wall Street estimates as the U.S. homebuilder sold more homes at higher prices, benefiting from a housing market that is witnessing supply constraints in the face of rising demand.

The company's shares were trading flat at $33.43 in light premarket trading on Tuesday.

Orders, a key metric of future revenue for homebuilders, expanded at its fastest clip in eleven quarters to rise 14.4 percent to 4,805 homes.

Pulte, which mainly sells single-family homes, said the average price of homes sold increased 4.9 percent to $410,000 from a year earlier, while the number of homes sold rose 7 percent to 6,632 homes.

Earlier this month, bigger rival Lennar Corp said strong economic growth in 2018 would offset concerns about housing demand being hit by cuts to tax relief on mortgages.

Housing demand remains robust in the United States but labor shortage has been hurting the pace of construction of new houses, leading to higher cost for homebuilders.

Pulte, which also sells townhouses and condominiums, said its adjusted gross margins fell to 23.8 percent from 24.9 percent in the quarter.

Homebuilders have been aquiring smaller rivals and land developers to tackle higher land acquisition costs in a tighter labor market.

Pulte was reaching the limit of its ability to reduce costs, BTIG analyst Carl Reichardt wrote in an earnings preview note on Monday.

The No.3 U.S. homebuilder's net income fell to $77.4 million, or 26 cents per share, in the quarter, from $273.2 million, or 83 cents per share, a year earlier.

The company's profit was hurt by a charge of $181 million due to changes in the U.S. tax law and a $57 million pre-tax charge relating to land adjustments.

On an adjusted basis, the company said it earned 85 cents per share. Analysts on average expected earnings per share of 85 cents compared with Pulte's profit of 88 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 12.1 percent to $2.79 billion, but missed the average analyst estimate of $2.82 billion.

Separately, the company announced on Tuesday a $500 million increase to its share repurchase plan.

Up to Monday's close, the Atlanta, Georgia-based company's shares had risen 57.2 percent in the last year. (Reporting by Arunima Banerjee in Bengaluru; Editing by Arun Koyyur)