The U.S. economy grew at a 3.1% annualized pace in the third quarter — stronger than previously thought, the Commerce Department said on Thursday.
The revision suggests 2024 was yet another shocker year in which the U.S. economy surprised to the upside, as other major nations grappled with sluggish growth.
The revision is an upgrade from the initial estimate of 2.8% growth in the July-Sept. period.
- It largely reflects stronger exports and better consumer spending, offsetting a bigger-than-estimated drag from inventory investment.
The third quarter grew at a slightly quicker pace than the prior quarter, which expanded at a 3% annualized rate.
- A tool developed by the Federal Reserve Bank of Atlanta estimates the economy might be even stronger in the current quarter, with 3.2% growth.
The Fed cut borrowing costs for the third time on Wednesday but signaled fewer cuts ahead in 2025. One reason: the economy is hanging on while progress on slowing inflation has come to a halt.
- "What we see happening in the economy again is most forecasters have been calling for a slowdown in growth for a very long time, and it keeps not happening," Federal Reserve chair Jerome Powell told reporters at a press conference on Wednesday.
President-elect Trump will inherit a strong economy. Still unclear is how his proposed policies on immigration, taxes, and tariffs will shape growth in the months to come.
Existing home sales in the US topped a rate of 4 million in November for the first time in six months as house hunters begrudgingly accept mortgage rates above 6%.
Contract closings increased 4.8% to an annualized rate of 4.15 million in November, the most since March, according to data released Thursday by the National Association of Realtors. That beat the median estimate of economists surveyed by Bloomberg, who expected a rate of 4.09 million.
“Home sales momentum is building,” NAR Chief Economist Lawrence Yun said in a prepared statement. While mortgage rates are still elevated, consumers are getting more comfortable with the current level, and job creation is strong, he said on a call with reporters.
November’s improvement aside, the market for previously owned homes has been stagnant with annual sales hovering around 4 million homes for the past two years, a ho-hum level that’s just three-quarters the pre-pandemic trend. That’s been due in part to a historic shortage of homes for sale as owners refuse to list their properties and give up their existing 3% mortgage rates, which in turn has driven up prices.
Yun said annual home sales are on pace to come in even lower than last year, which was the worst since 1995.
Slowly but surely, inventories have started rising this year as sellers come to terms with today’s high borrowing costs. While supply slipped last month from October — which Yun said is typical for this time of year — it was still notably higher than last November.
Affordability Challenge
Affordability remains a major hangup. The median sale price of a previously owned home increased 4.7% from a year earlier to $406,100 last month, a record for November. And while the Federal Reserve has lowered its benchmark interest rate by a full percentage point since September, mortgage rates remain twice their level from year-end 2021 and are expected to stay above 6% for at least another two years, according to the Mortgage Bankers Association.
Home financing costs for a 30-year fixed-rate contract were 6.75% in the week ended Dec. 13, per MBA data. Treasury yields — which influence mortgage rates — spiked Wednesday after the Fed’s final meeting of 2024, in which central bankers forecast fewer rate cuts next year.
Speaking after the decision, Fed Chair Jerome Powell said activity in the housing sector has been weak. He also said housing inflation is cooling, but slower than hoped.
In November, 53% of homes sold were on the market for less than a month, compared with 59% in October, while 18% sold for above the list price. Properties stayed on the market for 32 days on average, compared with 29 days in the previous month.
Existing home sales account for the majority of the US total and are calculated when a contract closes. The government will release figures on new home sales on Tuesday.
Luigi Mangione has waived his right to contest extradition to New York, where he is charged with murdering UnitedHealthcare CEO Brian Thompson on Dec. 4.
Mangione consented to be taken by authorities to New York at a hearing Thursday morning in a Pennsylvania courtroom.
Afterward, he was taken to a plane in Altoona, which departed for New York.
Mangione, 26, is accused of fatally shooting Thompson as the CEO was headed into the Hilton hotel in midtown Manhattan for an investor day of his company’s parent, UnitedHealth Group.
He was arrested five days later in Altoona after someone reported a suspicious person in a McDonald’s.
The University of Pennsylvania graduate was indicted Tuesday in Manhattan Supreme Court on one count of first-degree murder in furtherance of terrorism and two counts of second-degree murder, one of which is charged as killing as an act of terrorism.
He was also charged with multiple counts of criminal possession of a weapon.