Shares of homebuilders ticked higher Tuesday as contracts to buy previously occupied homes rose for a ninth straight month.
The surge in sales reflects homebuyers' rush to buy before the expected expiration of a federal tax credit of up to $8,000 for first-time buyers on Nov. 30. Last month, the government extended the credit until April 30 and created a credit of up to $6,500 for would-be buyers who have owned their current homes for five years.
The report by the National Association of Realtors showed that every region in the report saw year-over-year gains in pending sales. Typically, there's a one- to two-month lag between a contract and a done deal, so the index tends to anticipate future sales.
The seasonally adjusted index of sales agreements rose 3.7 percent from September to October to 114.1. It was the highest reading since March 2006 and almost 32 percent above a year ago, the largest annual increase ever for the index.
Economists surveyed by Thomson Reuters expected the index would fall to 109.5.
Shares of homebuilders were higher in afternoon trading. Hovnanian Enterprises Inc. gained 12 cents, or 3.1 percent, to $4.05; Lennar Corp.'s stock rose 36 cents, or 2.8 percent, to $13.03; Meritage Homes Corp. added 24 cents, or 1.4 percent, to $18.07; and shares of MDC Holdings Inc. advanced 67 cents, or 2.3 percent, to $30.36.
Pulte Homes Inc. edged up 25 cents, or 2.7 percent, to trade at $9.39 and KB Home's shares climbed 35 cents, or 2.6 percent, to finish at $13.90. Toll Bros. inched up a penny to $19.50, while DR Horton Inc. rose 16 cents, or 1.6 percent, to $10.44, and Ryland Group Inc. gained 63 cents, or 3.4 percent, to $18.94.