Sales of previously owned U.S. homes unexpectedly rose in January to the second-highest pace since early 2007, indicating the industry will keep prospering.

Closings, which usually take place a month or two after a contract is signed, advanced 0.4 percent to a 5.47 million annual rate, the National Association of Realtors reported Tuesday in Washington. Prices climbed from January 2015 as the number of dwellings on the market fell.

Near record-low mortgage rates, steady job gains and better wage growth are helping encourage prospective buyers, including first-time purchasers. Further strengthening in residential real estate will support the economy and make up for weakness in manufacturing tied to weaker global growth.

“Consumers are pretty keen to purchase a home,” said Gennadiy Goldberg, an economist at TD Securities in New York. “Slow and steady growth is what we want. It’s really positive for the U.S. economy in general.”

The January sales pace was the second-strongest since February 2007. The median forecast of economists surveyed by Bloomberg called for a 5.33 million annualized rate, with estimates ranging from 5.08 million to 5.55 million. December’s pace was revised to 5.45 million from an originally reported 5.46 million.

Compared with a year earlier, purchases increased 7.5 percent in January before adjusting for seasonal variations.

Closing Process

The data were volatile in the last two months of 2015 after a change in regulations aimed at consolidating the closing process. The introduction of new forms used by lenders and title companies led to delays in November signings that were subsequently made up in December.

Another report Tuesday showed home values in 20 U.S. cities steadied in the year ended December, putting residential real estate on healthier footing to contribute to the economic expansion.

The S&P/Case-Shiller index of property values increased 5.7 percent from December 2014, the same as in the year ended November, the group said. Nationally, prices climbed 5.4 percent.

The median price of an existing home rose 8.2 percent from January 2015 to $213,800. The appreciation was led by an 8.7 percent year-to-year advance in the Midwest and an 8.5 percent gain in the South.

Supply of Homes

Prices have been driven higher because of a lean supply of available houses. The number of previously owned homes for sale fell 2.2 percent from January 2015, to 1.82 million. At the current sales pace, it would take 4 months to sell those houses, compared with 3.9 months at the end of the prior month. Less than a five months’ supply is considered a tight market, the Realtors group has said.

“It remains to be seen whether we get sufficient inventory increases or whether the market will be choked by a lack of supply,” Lawrence Yun, NAR’s chief economist, told reporters as the figures were released. “We can’t stimulate more housing demand, we need to stimulate housing supply. Prices are rising way too fast.”

Purchases were led by monthly gains of 4 percent in the Midwest and 2.7 percent Northeast, the Realtors’ data show. Sales dropped 4.1 percent in the West and were unchanged in the South.

Sales of existing single-family homes increased 1 percent to an annual rate of 4.86 million, the most since July. Purchases of multifamily properties — including condominiums and townhouses — fell 4.7 percent to a 610,000 pace.

Of all purchases, cash transactions accounted for about 26 percent in January, down from 27 percent a year earlier, the report showed.

First-time Buyers

First-time buyers accounted for 32 percent of all purchases, up from 28 percent in January 2015 and matching the December share that was the highest since July 2012, the NAR said.

Distressed sales, comprised of foreclosures and short sales — in which the lender agrees to a transaction for less than the balance of the mortgage — accounted for 9 percent of the total. In January last year, the share was 11 percent.

The number of properties available has remained fairly lean and a Commerce Department report last week showing a drop in new construction starts offered little hope for an immediate rebound in construction.

Home Construction

Residential starts decreased 3.8 percent to a three-month low 1.1 million annualized rate. Budding wage growth and unemployment at an eight-year low of 4.9 percent in January are conducive to more home sales. Hourly earnings rose more than estimated last month after climbing in the year to December by the most since July 2009.

Favorable borrowing rates continue to cushion home buyers who are able to meet credit standards. The average rate on a 30- year, fixed mortgage held at 3.65 percent in the week ended Feb. 18, the cheapest since April and close to the record-low 3.31 percent reached in 2012, according to Freddie Mac figures dating to 1971.

Existing home sales, which are tallied only when purchase contracts close, account for more than 90 percent of the residential market. A timelier barometer is new-home purchases, because they are tabulated earlier in the process, when deals are signed.