Existing-home sales rose to a seasonally adjusted annual rate of 4.79 million from a downwardly revised annual rate of 4.69 million in September.
Sales for the month were 10.9 percent above the 4.32 million annual rate from October 2011, the National Association of Realtors said.
The median sales price for existing homes rose on an annual basis for the eighth consecutive month -- the longest streak since October 2005 to May 2006, the association said.
The median price of $178,600 is 11.1 percent higher than October 2011, the trade group said.
The total inventory fell 1.4 percent from September to 2.14 million existing homes on the market, a 5.6-month supply at the current rate of sales.
The supply of homes for sale is the lowest it has been since February 2006, when homes on the market were calculated to be a 5.2-month supply.
As prices rise, the value of homes translates into higher equity.
"Rising home prices have already resulted in a $760 billion growth in home equity during the past year," said NAR Chief Economist Lawrence Yun.
"Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year," he said.