Sales of existing U.S. homes increased more than forecast in October to the highest level since February 2007, Bloomberg reported following a statement today by the National Association of Realtors (NAR).

Purchases rose 10.1 percent to a 6.1 million annual rate from a 5.54 million pace in September, the NAR said. The median sales price decreased 7.1 percent from October 2008, the smallest decline in more than a year.

Cheaper homes and stimulus efforts such as the $8,000 tax credit for first-time home buyers, which was extended and expanded by the Obama administration this month, have revived an ailing housing market that contributed to the worst economic slump since the Great Depression. Further improvement that would aid the economy’s recovery depends on an easing in unemployment and foreclosures, according to Bloomberg.

“It’s an impressive increase and shows a lot of pent-up demand for housing,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York.

Existing home sales were forecast to rise to a 5.7 million annual rate, according to the median forecast of 66 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6 million, after an initially reported 5.57 million rate in September.

Sales were at a 4.49 million pace in January, their lowest level since comparable records began in 1999.

Purchases of existing homes rose 23.5 percent in October compared with a year earlier. The median price fell 7.1 percent from a year ago to $173,100.

The number of unsold previously owned homes on the market fell 3.7 percent to 3.57 million. At the current sales pace, it would take seven months to sell those houses compared with eight months at the end of the prior month. That supply is the lowest since February 2007.

The share of homes sold as foreclosures or otherwise distressed properties rose to 30 percent from 29 percent in September, NAR chief economist Lawrence Yun said.

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