House prices surprisingly fell in August for the first time since April. A 0.2 percent monthly decline in the Nationwide's index was well wide of the market consensus and followed an unrevised 0.3 percent increase in July. However, with base effects positive, annual inflation still rose from 2.1 percent to 2.4 percent, its strongest reading since December 2022. Prices are now around 3 percent below their all-time peak levels in 2022.

The 3-monthly change also accelerated to 0.5 percent, up from 0.3 percent in July and a 4-month high. Accordingly, the underlying trend remains positive and the Nationwide expects prices to be underpinned going forward as the economy continues to recover and lower borrowing costs ease affordability constraints.

More generally, today's update leaves both the UK RPI (minus 19) and RPI-P (minus 14) sub-zero and so indicative of overall economic activity still falling somewhat short of market forecasts.

Prices are seen up 0.2 percent on the month after a 0.3 percent rise in July.

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.