House prices rose for a third straight month in July. A 0.3 percent monthly advance was again a little stronger than expected and, following an unrevised 0.2 percent increase in June, lifted the yearly inflation rate from 1.5 percent to 2.1 percent, its highest mark since December 2022. However, prices still are around 28 percent below the all-time peak recorded in summer 2022.

The 3-monthly change also accelerated for the first time since March, suggesting a modest strengthening in the underlying trend. At 0.4 percent, the rate was up from 0.1 percent in the second quarter and has been above zero every month since October last year. Market activity remains relatively subdued, albeit still respectable given the high cost of mortgage borrowing. Indeed, with Bank Rate expected to be cut later today and again before the end of the year, affordability should gradually improve. That said, the Nationwide only sees house prices broadly flat over the rest of 2024.

More generally, today's update puts the UK RPI at minus 26 and the RPI-P at minus 34, both readings offering some support for the doves on the BoE's MPC.

Prices are seen up 0.1 percent on the month.

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.