The NAR's pending home sales index jumps 7.4 percent to 75.8 in September after an unrevised 70.6 in the prior month. The change is well above the consensus of up 1.0 percent in the Econoday survey of forecasters. The index is 2.6 percent higher than a year ago.

The dip in mortgage rates brought homebuyers into the market while they could lock in a favorable rate. The Freddie Mac rate for a 30-year fixed rate mortgage hit lows not seen in two years at 6.08 percent in the September 26 week. Along with more inventory and greater negotiating power on price and terms, contract signings increase across the country as buyers locked in rates before these went up again.

The pending home sales index by region shows an increase of 6.5 percent in the Northeast, 7.1 percent in the Midwest, 6.7 percent in the South, and 9.8 percent in the West.

Forecasters see pending home sales up 1.0 percent on the month.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.