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The annual rate of house price growth slowed to 10.5% in May – down from 10.8% in April, according to the latest figures.
Halifax said that house prices were up on a monthly basis by 1% in May – the 11th consecutive month of growth, and following a 1.2% increase in April.
The average house price reached a record high of £289,099 in May, the mortgage lender said.
It echoes figures from Nationwide Building Society last week showing that house prices were up on last year but the pace of growth had slowed for the third consecutive month.
Halifax said nine regions of the United Kingdom registered double-digit annual inflation, with only Yorkshire and the Humber, Scotland, and London in single figures.
Russell Galley, managing director at Halifax, said a shortage of homes for sale remains the main factor in price rises, despite the cost of living crisis.
But he said there were signs of the market cooling, adding: “Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.
“So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers’ market.”
Bank of England data published last week also showed a sharp drop in mortgage approvals during April.
Read more:
Mortgage borrowing falls by 36%
House prices at risk as inflation takes its toll
The BoE has raised interest rates four times since December, taking the bank rate to 1.0%.
Another increase is expected next week.
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