Yesh Atid's showing was the election's biggest surprise.

Its leader is a dynamic figure. Yair Lapid is a longtime prominent journalist whose late father, Tommy Lapid, led Shinui, a onetime secularist party that took on the influence and power of the ultra-Orthodox.

Yesh Atid called for reforming the governmental system, improving education, jump-starting the economy through small-business assistance and providing housing assistance for military veterans and young couples.

The Labor Party, whose leader Shelly Yacimovich campaigned solely on economic concerns, won 15 seats, according to exit polling. Before the election, she was expected to finish in second place, so that is a surprise. She and other centrists were working to tap into the disaffected Israelis who took to the streets in Tel Aviv in 2011 to protest frustrating economic conditions.

Michael Singh, managing director at the Washington Institute for Near East Policy, said the result reflects polarized politics in Israel.

An immediate consequence of the election is that coalition-building will be difficult and time-consuming, he said. The worst-case scenario would be government paralysis and maybe another election sooner rather than later.

David Makovsky, an Israeli analyst at the Washington Institute, said the election is good news for the Obama administration, which has had prickly relations with the right-wing Netanyahu government. The results came from a high turnout -- the percentage of eligible voters who cast a vote was 66.6%, 1% more than the 2009 election.

"It's unclear if Netanyahu wanted a pure right-wing option in the first place," Makovsky said.

"But Washington can breathe a sigh of relief that Netanyahu will need to reach accommodation with some parties at the center of the map who essentially would like to see progress on the Palestinian issue as well as on economic issues."