By Keith Coffman

COLORADO SPRINGS, Colo. (Reuters) - A deadly wildfire that has ravaged 400 homes, ranking as Colorado's most destructive ever, subsided on Friday as authorities reported significant headway in containing the blaze on the outskirts of Colorado Springs with help from rain and calmer winds.

The fire has charred roughly 24 square miles of rolling, forested terrain northeast of Colorado's second-largest city since it erupted on Tuesday, killing two people and forcing some 38,000 to flee their homes.

Fire managers expect it will take nearly another week to fully corral the blaze, but the outlook improved as rain showers moved into the area at midday following an encouraging night on the fire lines that El Paso County Sheriff Terry Maketa called a "turning point."

Overcast skies, cooler temperatures and the absence of strong, erratic winds that stoked the blaze during its first three days were also cited as key factors.

"We had a real good day without wind," Maketa told a news conference. "The rain made a tremendous impact."

While officials cautioned that conditions could change again for the worse, incident commander Rich Harvey of the U.S. Forest Service said there was "no significant progress by the fire in any direction today."

Aerial photos of devastated areas showed large swaths of obliterated neighborhoods with bare, blackened trees and houses reduced to cinders and rubble.

Governor John Hickenlooper said after touring the fire zone on Friday that he was struck by the "the randomness" of the destruction.

"There are places where few trees were left alone and the homes were burned to the ground. And then areas where the trees burned and the houses were fine," he said.

The remains of two people killed on Tuesday night, in the midst of an evacuation as flames closed in on them, were pulled from the wreckage of their garage on Thursday.


But the news was notably more upbeat a day later. Firefighters with bulldozers managed to clear a new buffer between the western edge of the blaze and the city limits of Colorado Springs.

As of late Friday afternoon, a firefighting force estimated to include some 800 personnel, along with air tankers and water-dropping helicopters, had managed to carve containment lines around 30 percent of the blaze's perimeter, up from 5 percent on Thursday.

Officials also lifted evacuation orders for the northern tip of the city, comprising more than 1,000 homes, along with some adjacent communities on its outskirts where some 4,000 to 5,000 people had been forced to flee.

Maketa said an investigation into the two fire-related deaths as possible homicides did not necessarily mean authorities suspect arson.

"When I say, 'homicide investigation,' it's because we have two deceased people (and) that means we investigate it as a crime until we prove otherwise," he said.

On Thursday, authorities said 360 homes had been confirmed as total losses, surpassing the previous record of 346 dwellings destroyed last year on the northwestern fringe of Colorado Springs by the so-called Waldo Canyon fire, then deemed the most destructive blaze in state history.

Although no additional structures burned overnight, the running tally of confirmed losses climbed by 40 homes on Friday.

Catastrophe modeling company AIR Worldwide, whose software is used by the insurance industry to predict losses, said the houses within the fire's perimeter had a total value of around $500 million. Ultimate losses could be less than that, though, depending on how badly damaged the houses were.

The Black Forest blaze, named for the community near where it started, was the largest of several burning across Colorado this week and has underscored concerns that prolonged drought conditions could intensify this year's fire season in the western United States.

(Reporting by Keith Coffman; Writing by Steve Gorman; Editing by Cynthia Johnston and Eric Walsh)