The NAR's pending home sales index in October reflects the impact of lower mortgage rates and moderation in home price increases. Potential homebuyers are more confident about home affordability, although consumers face uncertainty about the economic outlook and job security. Nonetheless, qualified buyers are entering the market.

The index is up 1.9 percent in October to 76.3 after a negligible upward revision to 74.9 in September. The October reading is well above the consensus of unchanged in the Econoday survey of forecasters. The dip in mortgage rates has motivated hesitant buyers to reenter the market. Nonetheless, conditions remain soft and demand may have been depleted in the near term. The index is down 0.4 percent compared to a year ago.

The monthly average rate for Freddie Mac 30-year fixed rate mortgages declined to 6.25 percent in October after 6.35 percent in September and 6.59 percent in August. The average rate for November to date is 6.24 percent. Future homebuyers may be hoping for a rate lower than that and where possible will wait for it to show up.

Forecasters see sales down 0.4 percent on the month in October after no change in September.

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.