Nginx serves files under root dir, but not from subdirs

I am running nginx on Ubuntu 11.10 with php-fpm and SELinux. The site is served over https/ssl

Content that is directly under any sites root dir is served, but when trying to access a subdirectory the following is added to /var/log/nginx/error.log:

 "/home/mydomain/public_html/{subdirectory}" failed (13: Permission denied)

I've tried turning off SELinux (setenforce 0). No change.

• The server is running as www-data and user mydomain belongs to group www-data.
• php-fpm is running as user mydomain
• permissions: /home dirs are 0750, subdirs are 0755

Site's configuration follows:

server {
        listen 443;

        root /home/mydomain/public_html;
        index index.html index.htm index.php;

        server_name www.mydomain.com;

        location / {
                try_files $uri $uri/ /index.php;
        }

        # pass the PHP scripts to FastCGI server listening on 127.0.0.1:9001
        location ~ \.php$ {
                fastcgi_pass 127.0.0.1:9001;
                fastcgi_index index.php;
                # include /etc/nginx/fastcgi_params;
        }

        ssl on;
        ssl_certificate /etc/ssl/certs/server.crt;
        ssl_certificate_key /etc/ssl/private/server.key;

        ssl_session_timeout 5m;

        ssl_protocols SSLv3 TLSv1;
        ssl_ciphers ALL:!ADH:!EXPORT56:RC4+RSA:+HIGH:+MEDIUM:+LOW:+SSLv3:+EXP;

}

server {
        listen 80;
        server_name *.mydomain.com;
        rewrite ^(.*) https://www.mydomain.com$1 permanent;
}

Here is the output of ls -al /home/mydomain/public_html as requested:

drwxr-xr-x. 3 mydomain mydomain 4096 2011-12-07 17:49 .
drwxr-x---. 6 mydomain mydomain 4096 2011-11-14 08:33 ..
drwxr-xr-x. 3 mydomain mydomain 4096 2011-12-06 16:23 subdirectory
-rw-r--r--. 1 mydomain mydomain   55 2011-12-07 17:50 index.php
-rw-r--r--. 1 mydomain mydomain   20 2011-12-07 17:49 info.php

This is the content of my subdirectory:

drwxr-xr-x.  3 mydomain mydomain 4096 2011-12-06 16:23 .
drwxr-xr-x.  3 mydomain mydomain 4096 2011-12-07 17:49 ..
drwxr-xr-x. 11 mydomain mydomain 4096 2011-12-06 16:26 html
-rw-r--r--.  1 mydomain mydomain   36 2011-12-06 16:23 index.php

Thank you for any help. Also, if any other issues with the configuration are found, please comment.