House prices surprisingly fell in March. A 0.2 percent drop in the Nationwide's index was nowhere near the consensus call and the first decline since December. However, it failed to reverse February's 0.7 percent rise and, with base effects positive, saw the annual inflation rate climb 0.4 percentage points to 1.6 percent, a 15-month high. Moreover, the 3-monthly change edged up from 1.0 percent in February to 1.1 percent.

Market activity is picking up but remains historically soft with mortgage approvals at the start of the year still down some 15 percent from their pre-pandemic levels. Even so, consumer sentiment and affordability are gradually improving and both buyer enquiries and new instructions to sell on the up, prices would seem to be reasonably well underpinned ahead of probable cuts in Bank Rate later in the year.

More generally, today's update puts the UK RPI at minus 7 and the RPI-P at exactly zero. Overall economic activity is running much as forecast.

Prices are expected to rise 0.3 percent on the month in March, doubling the annual inflation rate to 2.4 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.