WASHINGTON—Existing-home sales unexpectedly rose last month, though a drop in prices to their lowest level in nearly nine years suggests the housing market continues to search for a bottom.

Demand for used homes increased by 2.7% to a seasonally adjusted annual rate of 5.36 million in January, the National Association of Realtors said Wednesday.

Economists surveyed by Dow Jones Newswires had expected home sales to decline by 0.8%, to an annual rate of 5.25 million.

Despite a strong finish last year, with a 12.5% jump in existing-home sales in December, the housing market remains a weak point in the economy. Last year was the worst year since 1997, with about 4.9 million homes sold, according to the NAR. Read full article