Sales of previously owned US homes jumped to the highest level in nearly three years last month, the latest sign the economic recovery was gaining steam after growing below expectations in the third quarter.

The National Association of Realtors said last Tuesday that existing home sales rose 7.4 per cent to an annual rate of 6.54 million units in November. It was the fastest pace since February 2007 and above analysts' 6.25 million-unit forecast.

Separately, the Commerce Department said US gross domestic product grew at a 2.2 per cent annual rate in the third quarter instead of the 2.8 per cent pace reported last month. Economists had thought the final estimate of GDP, which measures total goods and services output within US borders, would hold steady at 2.8 per cent.

"The economic reports of late have been very upbeat. Most people are looking now for 3.5 to 4 per cent GDP growth in the fourth quarter, and the housing numbers are the icing on the cake," said Bruce Bittles, chief investment strategist at Robert W. Baird and Co in Nashville, Tennessee.

US stocks extended gains on the housing data, rallying for a third straight session, while prices of government debt were lower for the second day. The US dollar continued to firm against both the euro and yen.

The housing market, the main trigger of the most painful US recession in 70 years, is stabilising, analysts said. They hope an improving market will lift the spirits of households hit by the highest unemployment in a quarter century and encourage them to spend.

Even more heartening, the decline in home prices is fading. The median home price fell 4.3 per cent in November from a year ago, to $172,600, the National Association of Realtors said. It was the smallest drop since November 2007.