Dip in house sales takes gloss off US growth figures

The US economy expanded at a faster pace than previously estimated during the third quarter, official figures showed yesterday, but recovery hopes were tempered by evidence that the housing market remains hamstrung by tight credit conditions.

Gross domestic product expanded at an annualised rate of 2.5 per cent, the US Commerce Department said, revising its previous estimate of 2 per cent on the back of stronger data on spending and exports.

Though higher, economists said the figures were not strong enough to counter the country's unemployment woes. "It's a step in the right direction, but it's not strong enough to make a dent in the unemployment rate," said Ryan Sweet, a senior economist at Moody's Analytics.

The cheer was also limited by some grim data on the US housing market, with the National Association of Realtors (NAR) saying that sales of previously owned homes had declined by more than expected last month. Sales declined by 2.2 per cent to a seasonally adjusted annual rate of 4.43 million units, down from 4.53 million units in September. Economists had expected a decline to 4.49 million units.

The NAR's president, Ron Phipps, said that, along with the uncertainty caused by the temporary ban on foreclosures in some states, the housing recovery was being restrained by "overly tight credit" standards, which was making it difficult for potential buyers to secure mortgages.