Pending Home Sales Shoot Up 6.1%

(Updated with construction spending data and stock prices.)

WASHINGTON (TheStreet) -- Sales of pending homes soared in September, the eight straight monthly gain for the report.

The National Association of Realtors said sales of previously occupied homes shot up by 6.1% to an index reading of 110.1, as consumers scrambled to take advantage of the soon-to-expire tax credit for first-time home buyers. Economists expected a reading of 103.8.

This is the highest level since December 2006 and represents a 21% surge on a year-over-year basis.

Typically there is a one- to two-month lag between a contract and a done deal. Thus, the index serves as a barometer of future sales.

Separately, The Commerce Department announced today that construction spending inched up 0.8% during the month, surpassing the 0.3% decline economists expected.

Construction spending was lifted by a 3.9% gain on residential construction, the biggest jump in housing activity since July 2003.

But despite both of these positive results, there remains worry that the pending expiration of the $8,000 tax credit on Nov. 30 will mean another downturn in the industry. The housing industry is arguing that the credit should be extended.

Shares of homebuilders are up slightly in morning trading, following the news. KB Home(KBH Quote) is rising 1.5% to $14.38, Lennar(LEN Quote) is increasing 1.6% to $12.82, Toll Brothers(TOL Quote) is up 1.6% to $17.58, Pulte Homes(PHM Quote) is jumping 1.1% to $9.11 and NVR(NVR Quote) is advancing 1.7% to $673.33.

-- Reported by Jeanine Poggi in New York

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