However, house prices were still up 5.2% year-on-year.
As a result of the shift, average house prices were noted at £251,697.
The index also shows that on a quarterly basis, average house prices were up by 0.5%.
Russell Galley, managing director of Halifax, said: “Having enjoyed an extremely strong period of activity in the second half of last year, the housing market continued its softer start to 2021, with average prices down very slightly compared to January.
“However, with annual house price inflation currently at 5.2%, property values remain comfortably higher than 12 months ago, when February was the last full month before lockdown.
“The housing market has been at something of a crossroads at the start of this year, with upcoming events key to determining the path of activity and prices over the next few months.
“The government’s decision to extend the stamp duty holiday – one of the main drivers of demand from homemovers during the pandemic – has removed a great deal of uncertainty for buyers with transactions yet to complete.
“The new mortgage guarantee scheme is another welcome development from this week’s Budget.
“Whilst mortgage approvals have reached record highs in recent months, hitting levels not seen since before the financial crisis of 2008, raising a deposit continues to be the single biggest hurdle for first-time buyers to overcome.
“In the longer-term, the performance of the housing market remains inextricably linked to the health of the wider economy.
“The pace and extent of recovery are still highly uncertain, and much will depend on the ongoing success of the UK’s vaccination roll out.
“Though there is the likelihood of an economic ‘bounceback’ from lockdown, with households not unduly impacted by the pandemic deploying the significant reserves of savings that they have built-up, higher unemployment is likely to limit new buyer demand.
“Therefore, we would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021.”
Mark Harris, chief executive of SPF Private Clients, added: “The housing market softened slightly in February as it seemed too late for buyers to take advantage of the stamp duty holiday.
“But with the Chancellor announcing an extension to the concession in his Budget, more buyers are realising they could still reasonably expect to take advantage of the tax break, which will further help the market’s momentum.
“The introduction of 95% mortgages backed by the government from next month will also give first-time buyers and homemovers a boost.
“We have seen a flurry of enquiries from those who were planning to utilise the Help to Buy scheme who are now keen to buy older housing stock rather than new-build options.
“With the big lenders confirmed as offering the first 95% products, we look forward to seeing terms and pricing sooner rather than later.”
Miles Robinson, head of mortgages at Trussle, said: “Many had expected house prices to slow down as we approached the original stamp duty holiday deadline of 31 March.
“Although there’s been a very slight decrease of 0.1% in February, house prices are still significantly higher than last year, with annual price inflation at 5.2%.
“The Budget announcement this week is likely to boost buyer demand and market buoyancy.
“The introduction of the 95% loan-to-value (LTV) mortgage guarantee scheme is positive news for those buyers with small deposits, particularly first-time buyers, who found themselves priced out of the market as a result of the pandemic.
“High LTV mortgage products all but disappeared as lenders’ tightened criteria and increased scrutiny towards borrowers.
“As a result of this scheme, and more buyers entering the market, we could see an inflation in house prices in the coming months.
“The Budget also revealed an extension to the stamp duty holiday for another three months, and exemptions on property purchases below £250,000 until September.
“Not only will this support those buyers who are already experiencing delays in the market, but it will likely prevent the collapse of more than 100,000 housing transactions currently underway.
“The return of 95% LTV mortgages, coupled with the extension of the stamp duty holiday, is likely to offer some stability to the market.
“Over the past year, buyer demand has trumped any coronavirus-linked uncertainty, as people look beyond lockdown and plan for the future.
“As a result, we could continue to see both buyer demand and house prices grow.”
