NEW YORK (Reuters) - Shares of Hovnanian Enterprises Inc (HOV.N: Quote, Profile, Research) rose more than 26 percent on Tuesday amid share gains across the home building industry and on news that Hovnanian's chairman had bought stock.

Hovnanian's chairman and founder, Kevork Hovnanian, bought 220,000 shares at $5.18 each on July 3, according to a U.S. Securities and Exchange Commission filing.

News that the chairman bought stock might cause short sellers to cover their positions, said analyst John Tomlinson of Majestic Research.

Given Hovnanian's low market capitalization, the shares need only a few short sellers to cover their position to spark a rally, he added.

"A chairman buying shares would spook people who are short the stock," Tomlinson said. "He's an insider. He knows the market's been depressed. He's got access to superior information."

Shares of home builders were up broadly, with the industry index .DJUSHB up almost 8 percent in late trade, outpacing the S&P's broader market index .SPX, up only 1.4 percent.

Like home builders, other battered sectors such as regional banks and auto suppliers also rallied on Tuesday, noted Kevin Quinn, a managing director of equity trading at Stanford Group Company.

"I would put zero faith in this having any legs," said Quinn. "This is a one-day phenomenon."

Hovnanian shares were up 26 percent at $5.85 in late trading on the New York Stock Exchange.

(Reporting by Helen Chernikoff; editing by John Wallace and Braden Reddall)