LOS ANGELES (AP) — Sales of previously occupied U.S. homes rose in January as homebuyers seized upon easing mortgage rates and a modest pickup in properties on the market.

Existing home sales rose 3.1% last month from December to a seasonally adjusted annual rate of 4 million, the National Association of Realtors said Thursday. That’s the strongest sales pace since August and is slightly higher than the 3.98 million sales pace economists were expecting, according to FactSet.

The modest sales increase is an encouraging start for the housing market, which has been mired in a slump the past two years. Still, compared with January 2023, sales fell 1.7%. Existing home sales sank to a nearly 30-year low last year, tumbling 18.7% from 2022.

“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” said Lawrence Yun, the NAR’s chief economist.

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The pickup in sales helped push up home prices compared with a year earlier for the seventh month in a row. The national median sales price rose 5.1% from January last year to $379,100. That’s the highest median sales price for January on records going back to 1999.

A modest increase in the number of homes on the market helped lift sales. At the end of December, there were 1.01 million homes on the market, the NAR said. While that’s a 3.1% increase from a year earlier, the number of available homes remains well below the monthly historical average of about 2.25 million.

The available inventory at the end of January amounted to a 3-month supply, going by the current sales pace. That’s up 2% from the previous month and 3.1% January last year. In a more balanced market between buyers and sellers, there is a 4- to 6-month supply.

Competition for relatively few homes on the market and elevated mortgage rates have limited house hunters’ buying power on top of years of soaring prices.

While the cost of financing a home has come down from its most recent peak in late October, when the average rate on a 30-year mortgage hit a 23-year high of 7.79%, rates climbed to a 10-week high last week, according to mortgage buyer Freddie Mac.

“(Homebuyers) see mortgage rates getting closer to 7%; this is not good news for homebuyers out there,” Yun said.