Pending Home Sales Rise 3.7% in October

WASHINGTON (TheStreet) -- Pending home sales defied Wall Street's expectations and rose to their highest levels in more than three years, according to an industry report.

The National Association of Realtors reported that its index tracking pending home sales jumped a seasonally adjusted 3.7% to read 114.1 in October, marking nine consecutive months of rising sales. Analysts had expected pending home sales to slump by 1%, according to Thomson Reuters.

The pending home sales index represents the number of contracts signed in October for previously owned homes. The index is up nearly 32% compared to October 2008.

The recent recovery in home sales has been juiced by a swath of first-time home buyers attempting to take advantage of a home buyer tax credit that was originally set to expire at the end of November. President Barack Obama later signed legislation extending the program into the spring.

"Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus," said National Association of Realtors Chief Economist Lawrence Yun in a press release. "This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."

Yun later warned that home sales could dip in the near-term, citing the lag time in home buying spurred by the newly expanded tax credit and also noting that "the weak job market remains a major concern and could slow the recovery process." Still, he expects stabilizing conditions and firmer home prices by the middle of next year.