House prices fell again in February. A 0.5 percent monthly decline in the Nationwide measure was just marginally steeper than the market consensus but the sixth drop in a row. Following an unrevised 0.6 percent slide in January, this reduced annual inflation from 1.1 percent to minus 1.1 percent, its first sub-zero reading since June 2020 and its weakest mark since November 2012. Prices are now 3.7 percent below last August's peak.

The February data put the quarterly change at minus 2.0 percent, up from minus 2.3 percent in the three months to January but its fourth consecutive negative print. Looking ahead, consumer confidence improved significantly last month, no doubt buoyed by what is still a strong labour market, and supply shortages remain supportive. However, with deposit requirements prohibitively high for first-time buyers and both another hike in Bank Rate and a tight budget expected this month, the near-term outlook for prices remains soft.

More generally though, today's update puts the UK's ECDI and ECDI-P at 19 and, a very solid, 52 respectively. In the main, overall economic activity has recently surprised on the upside, boding well for a positive handle on first quarter GDP growth.

Prices are expected to drop a monthly 0.4 percent after a 0.6 percent fall in January.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.