Existing-home sales were up in December, reporting a 5.0% gain from November to an annual rate of 4.61 million units, according to data released today by the National Association of Realtors (NAR).

The improvement was led by condo and co-op sales, which were up 8.7% from the previous month, reaching a seasonally adjusted annual rate of 500,000. Single-family home sales gained 4.6% from November.

The lift helped last year’s overall existing-home sales beat 2010’s number by 1.7% with a total of 4.26 million existing homes sold.

The gain came at the cost of prices, however, with December’s median sales price of $164,500 representing a 2.5% drop from December 2010, even as the percentage of sales accounted for by distressed properties fell 4% year-over-year, to 32% in December 2011.

The sales boost also managed to reduce the market’s standing inventory to 2.38 million units, a 6.2-month supply, from a 7.2-month supply in November. However, "other data suggest that getting rid of the excess will be a drawn-out affair that will take at least two more years," wrote Patrick Newport, U.S. economist at IHS Global Insight, in a press release today. Newport pointed to a white paper written by economists at the Federal Reserve and submitted to Congress earlier this year. "The Fed estimated that about a fourth of the two million properties for sale at the end of the second quarter of 2011 were real estate owned (REOs), and that REOs would total about one million in both 2012 and 2013."

Investors accounted for a greater percentage of sales during the month, boosting their share to 21% of purchases, compared to 19% in November and 20% in December 2010. First-time home buyers accounted for 31% of purchases during the month, down from 35% in November and 33% the previous year.

Contract cancellations were reported by 33% of NAR members polled in December, unchanged from the previous month but up dramatically from the 9% reported the previous year.

All four regions of the country shared in the monthly gains, led by the Northeast, which gained 10.7% on a monthly basis and was up 3.3% annually. The Midwest rose 8.3% and 9.5% on a monthly and yearly basis, respectively. The South was up 2.9% from November and up 3.5% from December 2010. The West gained 2.6% on a monthly basis and was down 0.8% year-over-year.

"The market for single-family homes picked up in the second half of 2011, after being stuck near the bottom for nearly three years," Newport wrote. "This pickup is real, but the road to recovery will be a slow one. Our projection is that existing-home sales in 2012 will be 9% higher than in 2011."

Claire Easley is a senior editor at Builder.