The median price of a home sold in April was $271,600, the highest level on government records going back to 1993. The April price was 8.3 percent higher than in March and 13.1 percent higher than a year ago.
Steady job creation and near-record-low mortgage rates are spurring more Americans to buy homes.
With the April increase, sales are now 29 percent higher than a year ago, but sales are still below the 700,000 level considered healthy by economists.
The strength in April was led by a 10.8 percent rise in sales in the West. Sales in the South were up 3 percent but sales fell 16.7 percent in the Northeast and were down 4.8 percent in the Midwest.
Sales of previously owned homes rose in April to a seasonally adjusted annual rate of 4.97 million, the highest level in 3½ years.
Greater demand, along with a tight supply of available homes for sale, is also boosting prices in most markets and encouraging more construction.
Applications for permits to build homes rose in April to the highest level in nearly five years. While construction of new homes and apartments slipped a bit in April, the drop came one month after construction topped 1 million for the first time since June 2008.
Higher prices tend to make homeowners feel wealthier. That encourages consumers to spend more, which accounts for 70 percent of economic activity.
Federal Reserve Chairman Ben Bernanke cited the revival in housing as a significant benefit of the Fed's super-low interest rate policies.
"Higher prices of houses and other assets, in turn, have increased household wealth and consumer confidence, spurring consumer spending and contributing to gains in production and employment," Bernanke said in an appearance before the congressional Joint Economic Committee.
Several major homebuilders have reported strong annual increases in orders for the first three months of the year, Ryland Group Inc., said that its orders in April jumped 59 percent from a year earlier.
Though new homes represent only a fraction of the housing market, they have a sizable impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Home Builders