House prices in the three months to May dropped 0.2 per cent compared to the preceding quarter - the second quarterly fall recorded in the Halifax house price index since November 2012.
Halifax reported house prices in the quarter were up 3.3 per cent on the same period last year, but lower than in April and the annual rate of growth is the lowest it's been since May 2013.
House prices rose by 0.4 per cent between April and May. There has been virtually no change in prices over the past three months, according to the index.
"After reaching a recent peak of 10 per cent in March 2016, the annual house price growth has since fallen to 3.3 per cent in May," said Martin Ellis, Halifax housing economist.
"House prices have again fallen over the past three months. Overall, prices in the three months to May were 0.2 per cent lower than in the preceding three months; the same rate as in April.
"The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months."
May's data "should allay concerns that house prices are on a downward spiral" said Pantheon Macro's chief UK economist, Samuel Tombs, although he added: "Admittedly, average prices still are 0.7 per cent below their December 2016 peak, but Halifax hasn’t reported a month-to-month decline in prices since January.
"Recent further falls in mortgage rates are helping homebuyers to take out slightly larger loans, even though their real wages are falling. In addition, prices are being underpinned by a sharp reduction in supply."
He continued: "The extremely low rate of job losses means that few homeowners are being forced to sell their homes and many are deciding to delay listing their homes until the market strengthens again. So, while the days of rapid house price growth fuelled by sharp increases in leverage are over, we still see scope for prices to edge up over the rest of 2017."