WASHINGTON (MarketWatch) — The pace of existing-home sales rose in December, pushing 2013’s tally to the highest level in seven years as an improving economy and pent-up demand boosted results, according to data released Thursday.

After falling for three months, the seasonally adjusted annual rate of sales rose 1% in December to 4.87 million, the National Association of Realtors reported. Meanwhile, for all of 2013 sales hit 5.09 million, the most since 2006, and up 9.1% from the prior year.

“The data are consistent with recent weakening in sales having run its course, although evidence of a clear uptrend again is still lacking,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Economists polled by MarketWatch had expected a December sales rate of 4.9 million, matching NAR’s prior estimate for November. On Thursday NAR revised November’s sales rate to 4.82 million.

A home for sale in Brooklyn, N.Y. Bloomberg

Thursday’s home-sales report echoes other recent data showing that the housing market had a strong 2013, though results sputtered toward the end of the year as mortgage rates rose. Last week the government reported that home-construction starts for all of 2013 hit 923,400 — the highest annual total since 2007. Sales of new single-family homes in November were up almost 17% from the year-earlier period.

Also Thursday, NAR reported that the median sales price of used homes hit $198,000 in December, up 9.9% from the year-earlier period. For 2013 the median sales price reached $197,100, up 11.5% from the prior year, the strongest growth since 2005.

Low inventory levels have been supporting price growth. At the end of December, inventory was 1.86 million existing homes for sale, a 4.6-month supply at the current sales pace.

Home buyers and sellers face a variety of challenges in 2014. Mortgage rates are expected to continue to rise, which could curb some purchase plans. Also, lenders and borrowers face new mortgage rules.

But there’s also reason for optimism. There’s plenty of pent-up demand, and 2014 may see more young adults move out of their parents’ place. To support demand from young families and others, sufficient job growth is key, enabling more buyers to make a first-time purchase or trade up. Banks, who saw refinancing applications plunge last year as mortgage rates rose, could also support more home sales this year as they look to make more purchase loans.

More news from MarketWatch

China factory data show contraction

Al Lewis: Why billionaires of Davos must tackle inequality

Buffett’s Berkshire: Too big to fail?