However prices still rose by 8.3% over the year and 2.6% over the quarter; the average house price is now £192,372 according to the bank.
Commenting, Martin Ellis, housing economist at the Halifax, said: "House prices in the three months to February were 2.6% higher than in the preceding three months. This measure of the underlying rate of house price growth increased for the second consecutive month in February despite a small monthly fall in prices.
“Annual price growth nonetheless eased, from 8.5% in January to 8.3%, and is comfortably below last July’s peak of 10.2%.
“The firming in price growth shown by the recent pick-up in the three month-on-three month comparison and indications of a modest rise in activity are likely to be due to a boost to housing demand as a result of increases in real earnings and spending power, further recent falls in mortgage rates and stamp duty changes.
“The supply of both new and secondhand homes available for sale remains low; another factor that is likely to be supporting house prices. Supply remains tight despite housebuilding in England increasing for the second consecutive year in 2014 and a recent rise in the number of properties coming on to the market.”
Jeremy Duncombe, director, Legal & General Mortgage Club, agrees that a shortage in housing supply is a problem: “A fundamental issue affecting the market is the chronic shortage of housing supply, which means many people become priced out.
“This issue is currently high on the political agenda as we build up to the General Election, with all the main parties pledging to build more homes. However, whatever the outcome of the election, whoever takes power will need to fulfil their promise to build more homes and work towards obtaining a balanced market.”
Jonathan Samuels, chief executive of Dragonfly Property Finance, believes the slowdown in prices should be welcomed. "A sustainable, healthy property market and the growth we were seeing a year or so ago are mutually exclusive,” he said.
“With this in mind, the overall slowdown in prices should be welcomed. The market needed a breather and it's taking one.
"In certain areas of the UK, especially the capital, prices went crazy and we should be thankful for a return to more normal levels of growth.
“Whatever ups and downs we see on a monthly or quarterly basis, the shortage of property is systemic and will continue to underpin prices over the longer term.
“Despite February’s slight dip, there's still life in the market, as witnessed by the quarterly increase of 2.6%.
"With mortgage rates so low, disposable incomes high due to falling inflation, and an ever-improving jobs market, demand has by no means gone AWOL.
“Growthwise, 2015 is unlikely to be a 2014, but once the General Election is behind us I wouldn’t be surprised to see a slight pick-up in activity levels."
