Homebuyers scooped up more previously owned homes in October, slowly putting a dent in the huge inventory on the market, an industry report showed. Sales of existing homes rose 1.4% last month to an annual rate of 4.97 million homes, up from a downwardly revised 4.90 million homes in September, the National Association of Realtors reported. That was higher than expected. Economists polled by Briefing.com had expected an annual rate of 4.85 million homes in October. Compared to a year ago, the rate of existing home sales has jumped 13.5%, from 4.38 million units. Continued gains in home sales have lightened up the inventory of homes on the market, the report showed. Total housing inventory at the end of October slipped 2.2% to 3.33 million existing homes for sales, representing an 8-month supply at the current sales pace. That’s down from an 8.3-month supply in September, and continues an ongoing downward trend since hitting a record high of 4.58 million in July 2008. Source: CNN/Money

via The Atlantic
Finally, the U.S. gets a solid dose of good economic news: GDP grew at an annualized rate of 2.5% in the third quarter. After growing at a rate of just 0.8% in the first half of the year, that’s pretty welcome news. The quarter’s growth rate was the highest in a year. This appears to show that the recovery is back on track. Unfortunately, that track was a jobless recovery.

Today’s report probably comes as a relief to many: a double dip no longer appears to be imminent. But that doesn’t mean the U.S. recovery is suddenly strong and enduring. At this point, it’s neither.

While 2.5% growth is better than a weaker result, it isn’t enough to count on a much brisker rate of hiring. After the U.S. grew at the same pace in the third quarter of 2010, jobs were added at the pace of just 139,000 per month in the fourth quarter. That isn’t enough to make a significant dent in the unemployment rate. As a means of comparison, when unemployment dropped from 9.2% to 8.3% in the fourth quarter of 1983, GDP growth was 8.1% in the third quarter.

Other obstacles also remain firmly in place for the U.S. economy. Consumer confidence continues to struggle. In the third quarter, Americans’ spending was responsible for most of the growth we saw. If it suddenly slows due to gloomy consumers, then GDP growth will fade as well. Although we’re seeing some progress in Europe, its problems are not yet entirely solved. Of course, it’s also important to remember that this is just the first estimate of third quarter growth. We’ll get two more revisions over the next two months.

We should be cautiously optimistic about today’s growth estimate. The proper response is an it-could-have-been-worse attitude about the quarter’s measure of economic activity. While it appears to show that the U.S. isn’t headed into another recession, it doesn’t indicate that the nation’s troubles are entirely behind it.

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