* Stock falls 2.6 percent in after-hours trading

* Second-quarter loss narrows

* Books a $311.3 million gain on debt repurchase

NEW YORK, June 2 (Reuters) - U.S. homebuilder Hovnanian Enterprises (HOV.N: Quote, Profile, Research) said on Tuesday its quarterly loss narrowed sharply from a year earlier, due chiefly to a gain on the early extinguishment of debt and a tax benefit.

Hovnanian posted a net loss of $118.6 million, or $1.50 per share for the second quarter, which ended April 30, compared with a loss of $340.7 million, or $5.29 per share, last year.

The result was better than the loss of $1.83 analysts on average had forecast, according to Reuters Estimates.

Homebuilders have been bogged down by a glut of homes on the U.S. market, many a result of foreclosures. To survive they have been streamlining operations, reducing land positions, selling off homes started without buyers and focusing on generating cash to pay bills and maintain debt obligations.

The Red Bank, New Jersey-based builder said it ended the quarter with $779.2 million in homebuilding cash and $100 million balance on its revolving credit facility.

Hovnanian ended the quarter with 215 active developments, down 43 percent from the year earlier quarter. Its total land position fell 33 percent to 17,303 lots. The number of unsold homes fell 41 percent to 892 at the end of April.