House prices unexpectedly rose again in October. A 0.9 percent monthly increase followed a slightly stronger revised 0.1 percent gain in September to yield the first back-to-back advance since July/August last year. With base effects strongly positive, this was enough to boost the annual inflation rate from minus 5.3 percent to minus 3.3 percent, its first rise since April.

Still, the Nationwide attributed October's monthly gain to reduced supply and, at minus 0.5 percent, the quarterly change remains negative, indicating a declining underlying trend. Measures of market activity remain soft with mortgage approvals in September around 30 percent lower than their monthly average in 2019. Bank Rate might have peaked but consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.

More generally, today's update puts the UK's RPI at minus 18 and the RPI-P at minus 33. Both gauges show overall economic activity falling quite well short of expectations another reason for anticipating no change from the BoE MPC tomorrow.

Prices are expected to fall 0.4 percent on the month, lifting the annual inflation rate from minus 5.3 percent to minus 4.8 percent.

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.