U.S. Q3 economic growth revised down, house prices up

By Lucia Mutikani

WASHINGTON (Reuters) - The U.S. economy grew more slowly than first thought in the third quarter, but a fifth month of gains in house prices in September and an improvement in consumer morale signaled the anemic recovery was intact.

In its second estimate of third quarter gross domestic product published on Tuesday, the Commerce Department said the economy expanded at a 2.8 percent annual rate, probably ending the most painful U.S. recession in 70 years.

It was slower than the previous estimate of 3.5 percent but still the fastest pace since the third quarter of 2007, reflecting government fiscal stimulus. The new estimate was slightly below expectations for a growth rate of 2.9 percent.

That helped to push stocks on Wall Street lower as investors shrugged off two other reports showing house prices maintained their gains in September and consumers were a bit more optimistic this month, despite high unemployment.

"We are still on the right path and a double-dip (recession) is not on the cards," said Jonathan Basile, an economist at Credit Suisse in New York.

For a graphic on third quarter GDP, click

here

With federal programs the main force behind the recovery, some economists are wary of risks of a double-dip recession -- a scenario where output perks up briefly only to fall again when government support ends.