diff -rup shadow-4.0.17-orig/src/useradd.c shadow-4.0.17/src/useradd.c
--- shadow-4.0.17-orig/src/useradd.c	2006-11-29 18:31:43.000000000 -0500
+++ shadow-4.0.17/src/useradd.c	2006-11-29 21:38:22.000000000 -0500
@@ -45,6 +45,9 @@
 #include <sys/stat.h>
 #include <sys/types.h>
 #include <time.h>
+#ifdef WITH_SELINUX
+#include <selinux/selinux.h>
+#endif
 #include "chkname.h"
 #include "defines.h"
 #include "faillog.h"
@@ -1612,6 +1615,9 @@ static void usr_update (void)
  */
 static void create_home (void)
 {
+        mode_t mode = 0;
+
+        mode = 0777 & ~getdef_num ("UMASK", GETDEF_DEFAULT_UMASK);
 	if (access (user_home, F_OK)) {
 		/* XXX - create missing parent directories.  --marekm */
 		if (mkdir (user_home, 0)) {
@@ -1625,9 +1631,19 @@ static void create_home (void)
 #endif
 			fail_exit (E_HOMEDIR);
 		}
+#ifdef WITH_SELINUX
+                {
+                        security_context_t con = NULL;
+
+                        if (!matchpathcon(user_home, mode, &con))
+                        {
+                                setfilecon(user_home, con);
+                                freecon(con);
+                        }
+                }
+#endif
 		chown (user_home, user_id, user_gid);
-		chmod (user_home,
-		       0777 & ~getdef_num ("UMASK", GETDEF_DEFAULT_UMASK));
+		chmod (user_home, mode);
 		home_added++;
 #ifdef WITH_AUDIT
 		audit_logger (AUDIT_USER_CHAUTHTOK, Prog,
Only in shadow-4.0.17/src: useradd.c.useradd