A federal appeals court revived on Wednesday a lawsuit by homeowners who accused several major U.S. homebuilders of causing them harm by marketing neighboring homes to people at high risk of foreclosure.

The 9th U.S. Circuit Court of Appeals in San Francisco said a lower court erred in concluding the homeowners lacked standing to sue defendants, including Beazer Homes USA Inc, DR Horton Inc, Lennar Corp, PulteGroup Inc's Centex Homes and Ryland Group Inc.

These homeowners claimed the developers were at fault for soliciting and providing financing to the high-risk buyers of those neighboring homes and then concealing this activity. They said their homes lost value and became less desirable as the neighboring homes went into foreclosure or were abandoned.

Writing for a 9th Circuit panel, Judge Betty Fletcher said the plaintiffs may file an amended complaint to show a sufficient link between the defendants' actions and the resulting economic harm. She returned the case to a federal district court for further proceedings.

(Reporting by Jonathan Stempel in New York; editing by Andre Grenon)

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