According to the Halifax, house prices were unchanged in May, matching the market consensus and following a marginally steeper revised 0.4 percent monthly fall in April. As a result, the yearly inflation rate declined from 0.1 percent to minus 1.0 percent, its first sub-zero print since 2012.

Even so, the quarterly change, the best guide to underlying developments, was stable at 1.3 percent, its second positive reading following a run of negative outturns between November 2022 and March this year. Regionally the picture was again mixed with annual falls in the South East (1.6 percent) and Greater London (1.2 percent) contrasting with gains in the West Midlands (2.7 percent) and Wales (1.1 percent).

The May update means that house prices are now around £3,000 lower than a year ago and about £7,500 short of last August's peak. However, prices are still £5,000 higher than at the end of last year, and £25,000 above their level two years ago. Moreover, other data also point to a loss of market momentum. Consequently, although supply is still quite tight, prices are likely to remain under downside pressure for some months yet. More generally however, today's update puts the UK ECDI at 21 and the ECDI-P at 19, both gauges showing overall UK economic activity still moderately outperforming market expectations.

Prices are expected to be stable after a 0.3 percent monthly fall in April.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

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.