Sales of new homes rose last month to the highest level in more than a year as strong activity in the South made up for weakness in the rest of the country.
The Commerce Department said Wednesday that sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September.
Economists surveyed by Thomson Reuters had expected a pace of 410,000. The report tallies signed contracts to buy homes, rather than completed sales.
Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to some existing homeowners. The credit now covers contracts signed by April 30.
The surge in sales was driven entirely by a 23 percent increase in the South. Sales fell about 5 percent in the West and Northeast, and fell 20 percent in the Midwest.
Despite the lack of certainty about the tax credit that buyers faced in October, sales were up 5.1 percent from a year ago, the first yearly increase since November 2005.
The median sales price of $212,200 was almost even with $213,200 a year earlier, but up almost 1 percent from September's level of $210,700.
The building industry lobbied hard for the tax credit extension, and builders have been feeling better about their business prospects these days.
Last month, Ryder Homes of Nevada resumed construction on houses at two of its communities around Reno.
"We're finding people aren't coming in willing to wait six months," said Rob Dunbar, Ryder's land development manager.
By scaling back on construction, the building industry has brought the oversupply of homes on the market under control.
There were 239,000 new homes for sale at the end of October, down 4.4 percent from September and the lowest inventory level in nearly four decades.
At the current sales pace, that represents 6.7 months of supply, down from last winter's peak of more than a year.
The housing market, buoyed by federal assistance, has been recovering from the worst downturn in decades.
The National Association of Realtors said Monday home resales rose 10 percent from September to October, the biggest monthly increase in a decade.
Along with the tax credit, buyers are being attracted by low prices and mortgage rates.
Separately, rates on 30-year mortgages dropped in the past week to match a record low set in April, while the 15-year home loan rate fell to a new all-time low, home funding company Freddie Mac said on Wednesday.
Also, demand for home loans slipped last week despite the fact that mortgage rates hovered near record lows, the Mortgage Bankers Association said.
A rise in home purchase requests and a drop in refinancing applications, however, were distorted by revisions to the prior week's data, the industry group said.
—Reuters contributed to this report.