(Updated for mid-day change in shares prices).

WASHINGTON, D.C. ( TheStreet) -- Existing home sales showed a strong gain in October, the seventh consecutive month of an upward trend, surging 10.1% for the month to 6.10 million units.

The rate was 23.5% above the October 2008 level and the highest since February 2007, when 6.55 million units were sold. The level topped market estimates of 5.7 million units, which was itself an optimistic outlook for a beaten-down sector.

The looming expiration of the first-time buyer tax credit, since extended, could have played a large part in driving up home sales across the country. Still, it was a bright piece of news for a Monday morning that followed a really tough previous week for the U.S. home market.
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Last week was a dismal one for the housing market , with the combination of poor housing permit data, higher foreclosure rates and weak earnings from D.R. Horton on Friday, beating down stocks in the sector.

However, analysts had seen some good news amidst the chaos, in terms of new orders and inventory backlogs, and historically low interest rates. Mortgage interest rates were the third-lowest since 1971 last month.

Indeed, several of the major homebuilders, including D.R. Horton, were up on Monday. Horton had rebounded from its 15% plummet on Friday, up 2% in the early afternoon. Meritage Homes ( BHS) was up 3.3% in the early afternoon; M/I Homes (MHO) was up 2.9%; and Brookfield Homes ( MTH) was up 2%. Though some homebuilders were still evidencing the sector's uncertain fortunes, most notably, KB Homes ( KBH), which was down a little more than 1.5% in the afternoon.

Total housing inventory at the end of October fell 3.7% to 3.57 million existing homes available for sale, which represents a 7-month supply at the current sales pace, down from an 8-month supply in September. Unsold inventory totals are 14.9% below a year ago.

The National Association of Realtors was surprised by the extent of the surge in its monthly home sales tracker: "Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month. With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer," said NAR chief economist Lawrence Yun.

The supply of homes is at its lowest level since February 2007.

NAR President Vicki Cox Golder, said strong demand by first-time buyers is creating some unusual conditions. "In parts of the country, especially in Southwestern states but also in Florida and suburban Washington, D.C., we've been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly. In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive."

Single-family home sales rose 9.7% to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4% above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8% from a year ago, with foreclosed properties driving down the median price across all categories.

Existing condominium and co-op sales surged 13.2% to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8% above the 547,000-unit level a year ago.

Regionally, existing-home sales in the Midwest led the surge, up 14.4% in October to a pace of 1.43 million, and 28.8% above a year ago. The median price in the Midwest was $146,600, a gain of 1.1% from October 2008. The lowest regional gain was in the West of 1.6%, or an annual rate of 1.31 million, which was still 12% above a year ago. The median price in the West dropped 14.7% from a year ago to $220,200.

-- Reported by Eric Rosenbaum in New York

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