WASHINGTON (AP) -- U.S. home prices rose in September at the slowest pace in more than two years, reflecting modest sales gains and a rising number of available homes. Meanwhile, the economy grew at a solid 3.9 percent annual rate in the July-September period, even faster than first reported, giving the country its strongest six months of growth in more than a decade. <br />
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HOME PRICE GAINS<br />
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The Standard & Poor's/Case-Shiller 20-city home price index, released Tuesday, increased 4.9 percent in September from 12 months earlier. But that's down from 5.6 percent in August and the smallest gain since October 2012.<br />
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On a monthly basis, the 20-city index was unchanged, the first flat reading in seven months. The monthly changes aren't adjusted for seasonal factors such as colder weather, which can impact sales. Prices dropped in nine of 20 cities from August.<br />
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Home price gains have slowed this year after rapid, double-digit increases in the previous two years. Investors helped drive the strong gains by bidding up prices but have started to cut back on their purchases. Smaller price gains and low mortgage rates could make housing more affordable.<br />
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More Americans are also listing their homes for sale, helping keep prices in check. Nationwide, 2.22 million homes were on the market in October, up 5.2 percent from a year earlier.<br />
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After the roller-coaster of collapsing home prices during the housing bust, followed by big increases in 2012 and 2013, many economists have welcomed the modest gains this year.<br />
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"This slowdown is a critical step on the road back to a normal," said Stan Humphries, chief economist at real estate data provider Zillow. "The market is becoming more balanced between buyers and sellers."<br />
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ECONOMY GREW AT 3.9 PERCENT RATE IN 3Q<br />
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The U.S. economy grew at a solid 3.9 percent annual rate in the July-September period, even faster than first reported, giving the country its strongest six months of growth in more than a decade.<br />
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The third quarter growth rate climbed from an initial estimate of 3.5 percent because of greater spending by consumers and businesses, the Commerce Department reported Tuesday. The figure followed a 4.6 percent surge in the spring, which resulted in the biggest consecutive quarters of growth since 2003.<br />
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Analysts believe momentum could slow to around 2.5 percent in the current quarter but then accelerate again in 2015. They expect growth of around 3 percent, representing a sustained acceleration in activity six years after the Great Recession.<br />
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"The question of whether the economy is accelerating or will accelerate is no longer a question; we can say somewhat definitively that the economy has already accelerated," said Dan Greenhaus, chief strategist at BTIG.<br />
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The economy as measured by the gross domestic product - the country's total output of goods and services - has been on a roller coaster this year. It started with a steep slide in activity in the first three months of the year when GDP contracted at a 2.1 percent rate, largely due to a severe winter.<br />
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Consumer spending, which accounts for 70 percent of economic activity, grew at a 2.2 percent rate in the third quarter. The figure was an improvement from an initial estimate of 1.8 percent growth. Business investment in equipment shot up at a 10.7 percent rate, an increase from an initial estimate of 7.2 percent.<br />
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Since the recession ended in June 2009, growth has averaged at subpar rates just above 2 percent. This lackluster recovery has been blamed on the financial crisis and the severity of the recession. Such types of downturns are usually harder to recover from because it requires repairs to the banking system to get credit flowing again.<br />
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But economists believe 2015 will be the year when the recovery shifts into a higher gear, in part because they expect the government itself to help. Government spending grew at a 4.2 percent rate in the third quarter, the strongest performance since the spring of 2009. The gain was bolstered by a 16 percent surge in defense spending.<br />
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