U.S. economic growth slowed during the third quarter to its lowest growth rate in three years amid a slump in the housing sector. Spending on housing fell to its lowest rate since 1991.

Gross domestic product increased at a seasonally adjusted 1.6% annual rate July through September, the U.S. Commerce Department said today in its first of three readings on third-quarter GDP.

The gain was weaker than the second quarter’s 2.6% rate and the first quarter’s robust 5.6% pace. It was the lowest rate of growth since the 1.2% recorded in the first three months of 2003.

Wall Street economists had expected a much higher growth rate of 2.2% for the third quarter.

Today’s report showed that inflation gauges eased. The government’s price index for personal-consumption expenditures climbed 2.5%, after rising 4% in the second quarter. The PCE price index excluding volatile food and energy components, an inflation gauge closely watched by the Fed, rose 2.3%, after a 2.7% increase. The price index for gross domestic purchases, which measures prices paid by U.S. residents, climbed 2%, after a 4% gain. The chain-weighted GDP price index increased 1.8%, after rising 3.3%.

GDP measures all goods and services produced in the economy. Consumer spending accounts for about 70% of GDP and it rose 3.1% after increasing 2.6% in the second quarter. Spending contributed 2.13 percentage points to GDP in the third quarter, after a contribution of 1.81 percentage points in the prior quarter.