Source: CNN/Money

Home prices posted the largest annual gain since housing bubble days in August, although the month-over-month gain slowed for the fourth straight month. The closely watched S&P/Case-Shiller home price index increased 12.8% from a year earlier, the biggest 12-month gain since February 2006.

But with mortgage rates significantly higher in recent months, the pace of increases is slowing. The 1.3% rise compared to July is only half the monthly increase posted in April when mortgage rates were near a record low. Still, the recovery in the housing market continues to be strong, helped by a drop in foreclosures that were weighing on overall prices. A drop in the unemployment rate is also helping to support the housing recovery.

Home prices continue to riseExperts said the slowing of the monthly increase is not necessarily a bad thing, as it will reduce the chance of another bubble in home prices.

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