Pending home sales rose 3.5% to an index reading of 109.3 in October, from a downwardly revised 105.6 in September, a 0.4% drop, according to a report released Wednesday by the National Association of Realtors.

The September reading was initially reported as unchanged at 106.0.

An index of 100 is equal to the average level of contract activity during 2001.

Year-over-year the pending homes sales index decreased 0.6% from last October, when the index was 110.0.

Economists polled by IFR Markets predicted the index would be up 1.1%.

Regionally, pending sales were mostly higher. The Northeast saw a 0.5% rise to 95.0, while sales gained 2.8% to 105.8 in the Midwest, 7.4% in the South to 123.6. Sales fell 0.7% in the West to 101.6.

“Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999,” NAR Chief Economist Lawrence Yun said. “Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”

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