New home sales jumped 10.7% at an annual rate of 495,000 in October.
Economists had forecast that sales of new single-family houses rose 6.8% at an annualized rate of 500,000 according to Bloomberg.
"According to the NAHB housing survey, demand for new homes was robust in October," Bank of American Merrill Lynch economists wrote to clients before the report. "Moreover, the trend has been solid for mortgage purchase applications."
The median sales price of new houses was $281,500, according to the Department of Commerce.