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* Credit Suisse calls top on UK housebuilders' rally
* Bucks consensus as others see further double-digit gains
* Sector average 34 percent below intrinsic value-StarMine
* Demand to sell the sector short falling from low level
By Tricia Wright and Simon Jessop
LONDON, March 7 (Reuters) - On the day another housebuilderjoined the UK's leading share index, Credit Suisse bucked theconsensus and called the top of the market for one of the year'sbest-performing sectors.
The Thomson Reuters UK Homebuilding index has risen 10 percent in 2014. It doubled in value during thepast three years, underpinned by tight supply and UK initiativesto spur the job-intensive sector, such as the 'Help-to-Buy'mortgage scheme.
After the Credit Suisse note, stocks in Bellway,Taylor Wimpey and Persimmon fell 2 to 3 percent -on the same day Barratt Developments won promotion tothe FTSE 100.
Credit Suisse said house prices may well rise further, butit reckoned any good news was already priced into shares.Meanwhile, more competitive land valuations and rising mortgagecosts could derail the rally.
"We recognise we may be a little early on this call, butgiven the huge performance in sector share prices over the pastthree years and the potential for sentiment to turn veryquickly, we suggest, when considering the risk-reward balance,that it is prudent to take profits now," the investment banksaid in a note.
Data from Thomson Reuters StarMine suggest the rally inhousebuilders could maintain its momentum for the time being.And negative bets on the sector are decreasing.
Analyst sentiment remains bullish, even towards the bestperformers. Around three-quarters of StarMine's top-ratedanalysts have "buy" or "strong buy" ratings on BarrattDevelopments and Bovis Homes, which have gainedabout 30 percent and 15 percent respectively this year.
StarMine shows the firms in the sector trade at an averagediscount of 34 percent to intrinsic value.
The data rank companies based on the relationship between afirm's stock price and its most likely growth trajectory, usinghistorical models and adjusting for analyst bias.
Meanwhile, Markit data show average short interest - sellingborrowed shares, hoping to buy them back more cheaply and pocketthe difference - is at just 0.2 percent, having dropped fromaround 0.5 percent in December.
George Godber, the manager of the CF Miton UK ValueOpportunities Fund, owns shares in Redrow, Bellway and Crest Nicholson, and he expects they willcontinue to rise over the next 12 months. "I still think there's20-30 percent to go," he said.
