By Lorraine Turner

LONDON (Reuters) - Home buyers are returning to the market said housebuilder Persimmon on Monday, as it reported improved trading in the third quarter as well as lower debt.

"The market is encouraging. Buyers are back. Prices have stabilised and there is growing availability of mortgages," CEO Mike Farley told Reuters.

The UK's largest housebuilder by market value said it met its sales targets for the year and booked a further 500 million pounds of sales for 2010.

Persimmon (PSN.L: Quote, Profile, Research) added its debt position at the year-end will be "significantly lower" than its previous guidance of 400 million pounds, enabling it to purchase new land and open outlets.

"The focus now is on growing our margins, we are comfortable with our level of debt," which stood at 399 million pounds at the end of October, said Farley.

"The key area of outperformance is the group's cash position and we believe that this should be taken positively by the market," said analysts at Panmure Gordon.

Shares in Persimmon were up as much as 5.7 percent earlier on Monday, continuing their rally of over 17 percent so far this month, but by 9:29 a.m. were up 3.5 percent at 476.4 pence.

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