Existing home sales increased to the highest level in eight months in January, Bloomberg reported.

Purchases increased by 2.7 percent to a 5.36 million annual rate, according to figures from the National Association of Realtors released today. The share represented by foreclosures and short sales rose to a 12-month high, pushing the median price to the lowest level in almost nine years.

Sales are 5.3 percent above the 5.09 million level of January 2010, the first time in seven months that sales activity was higher than a year earlier.

“It is really a foreclosure-driven market,” said Ethan Harris, head of development markets at Bank of America Merrill Lynch Global Research in New York in an interview with Bloomberg. “I don’t think it’s a sign of the market returning to health.”

Lawrence Yun, chief economist with the Realtors association, said in a press release that the improvement is a good sign, but things could be better.

“The upturn in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

Sales of existing home in the Midwest rose by 1.8 percent in January to 1.14 million, 3.6 percent above the previous year. The median price in the region was $126,300, which was 3.2 percent below the median price in January 2010.