The economy turned in a better — but still subpar — performance in the first three months of this year, mostly spurred by stronger sales of U.S. products overseas.

The 1 percent annualized increase in gross domestic product, announced by the Commerce Department on Thursday, marked a slight improvement from the government's previous estimate of 0.9 percent growth for the January-to-March quarter. And, it showed the economy logging stronger growth than the feeble 0.6 percent pace registered in the final three months of last year.

Still, the first quarter's performance pointed to a fragile economy, shaken by housing, credit and financial debacles. That has made people and businesses more cautious in their spending and investment, restraining overall economic activity. More normal growth would be along the lines of a 2.5 percent to 3 percent pace, analysts said.

Gross domestic product, or GDP, measures the value of all goods and services produced within the United States and is the best barometer of the nation's economic fitness. The latest GDP reading matched economists' forecasts.

In other reports, sales of previously owned homes nudged up in May, although prices continued to drop, the National Association of Realtors said. Sales rose 2 percent to a pace of 4.99 million units. The median sales price, however, fell to $208,600, down 6.3 percent from a year ago. That was the fifth biggest year-over-year price decline in records that go back to 1999. Many analysts think housing prices need to stop falling or start rising for the ailing housing market to get back its health.

The Labor Department, meanwhile, said the number of new applications filed for unemployment benefits held steady over the last week at 384,000. The figure, higher than analysts were expecting, pointed to a struggling jobs market.

On Wall Street, stocks slumped. The Dow Jones industrials were down nearly 150 points in morning trading.

With inflation concerns growing, the Federal Reserve on Wednesday ended a nearly yearlong string of interest rate reductions to bolster the economy.