A reduced sign is displayed in front of a house for sale outside of Greensboro, North Carolina. (Victor J. Blue/BLOOMBERG)

Existing-home sales recovered during the first month of the year after falling off to close 2011, according to data released Wednesday by the National Association of Realtors.

Sales of previously occupied homes increased 4.3 percent from a downwardly revised 4.38 million in December to 4.57 million in January. That’s the fastest pace since May 2010 (4.89 million) and 0.7 percent higher than the mark one year ago.

The portion of transactions involving first-time buyers also rose to 33 percent from 31 percent the month before, helping the nation’s total housing inventory fall 0.4 percent to 2.31 million homes up for sale.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” NAR chief economist Lawrence Yun said in a statement. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets.”

This marks the index’s third climb in four months, prompting some economists to suggest the housing market has hit bottom and may be starting to turn back around. The national inventory of existing homes also has trended down for more than four years and is now 20.6 percent lower than its mark in January 2011.

But while total volume of sales are expected to continue along that trajectory in the coming month, home prices are not expected to see only modest appreciation this year.

Some economists warn that the recent settlement with five large banks over foreclosure fraud will increase the number of foreclosed homes on the market in the coming weeks and months.

Related: December home sales