JERUSALEM (CNN) Israeli Prime Minister Benjamin Netanyahu and his right-wing party, victors of Tuesday's national elections but chastened over the rise of centrist challengers, heard the voters' populist voices loud and clear.
Netanyahu announced Wednesday three top priorities straight from the playbook of a new and surprising centrist rival, Yair Lapid, as he starts to pursue the formation of a new government.
They are: increasing equality in the burden on the public, seen as a reference to the practice, unpopular among secularists, of giving military exemptions to the ultra-Orthodox; the grinding issue of affordable housing; and changing what many see as Israel's "ineffective" system of government.
These happen to be major planks of Lapid's upstart party, Yesh Atid, which surprisingly came in second in Tuesday's elections to Netanyahu's Likud Beitenu party. And they are messages hammered home by others in the center and on the left.
In addition to security and diplomatic responsibilities, Netanyahu said, these three principles will be the focus in the formation of Israel's new government.
"We awoke this morning after the election with a clear message from the public," Netanyahu said. "We want to put together the widest possible government that will bring these changes to the nation and people of Israel."
No single party in Israel ever gets a parliamentary majority of more than 60 seats, so parties must rely on coalition-building. The question is whether Netanyahu will stay on the right or move to the center in political jockeying over government formation.
Netanyahu's statement indicates that he might try to attract centrists into a government coalition rather than form a hard-right bloc.
Their presence could mean a greater focus on addressing economic ills. It could also usher in a more amenable stance toward pursuing peace negotiations with Palestinians, a stance that would be embraced by the United States.
The Labor party, like Lapid, stressed domestic problems, while the new party Hatnua, led by former Foreign Minister Tzipi Livni, focused on peace talks.
Some pre-election expectations had been that the government would move even further to the right, with Likud Beitenu winning and other right-wing movements gaining clout.
But Likud Beitenu and a party further to the right called the Jewish Home faced unexpected muscle from the center.
Likud Beitenu, a coalition of the Likud and the Yisrael Beitenu parties, had 42 seats in the outgoing Knesset, Israel's parliament. The bloc, which was forecast to lose some ground but still win, earned only 31 in this election, according to exit polling from the daily newspaper Haaretz, a sharp drop.
"Actually the pundits did not understand what Israeli society was thinking and feeling," said Marcus Sheff, executive director of the Israel Project, an advocacy group.
"Instead of the far right, they went to the center. What voters were saying was very clear, I think. They were saying, 'Let's go to the center.' They were saying, 'Let's go to those values, the values Israel was established on, liberal Israel, secular Israel, moderate Israel -- an Israel where peace with our neighbors is important but security is also important.' "
Palestinians are watching the election closely, and they have a wait-and-see attitude. What they care about first and foremost, Palestinian politician Hanan Ashrawi stressed, is a government that accepts "the basic requirements of peace in terms of the legal foundations and in terms of policies, measures and behavior on the ground."
"We don't think suddenly the sun is out and peace is on the horizon," she said. "It is going to be extremely difficult, given that if Netanyahu joins with so-called moderate parties, that this will make him more palatable to the rest of the world, and therefore there will be a willingness to give him more room and improve his image in the West if he forms a coalition with Lapid and others."
The Central Election Committee reported Wednesday that 99% of votes had been counted and verified, but the count of votes from members of the military and prisoners won't be final for a couple of days.
Official results and allocation of seats in the Knesset won't be announced until then. The announced results have been based on media exit polling.
The Haaretz exit polling shows a left-right split among major parties: Along with Likud Beitenu's 31 seats, Jewish Home got 11. Two religious parties, Shas and United Torah Judaism, got 11 and 7, respectively. Among centrists, Yesh Atid got 19, Labor 15 and Hatnua, 6. A left-wing party, Meretz, also earned 6.
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."