LOS ANGELES — The average long-term U.S. mortgage rate slipped this week to the lowest level in four weeks, a boost for house hunters facing a market held back by persistently high prices and a near-historic low number of homes for sale.

Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan fell to 6.78% from 6.96% last week. A year ago, the rate averaged 5.54%.

The latest move in rates brings the average slightly below the highest level since it surged 7.08% in early November. High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans.

10-Year Treasury Yield Eases

The pullback in rates follows a modest easing in the 10-year Treasury yield, which climbed above 4% two weeks ago for the first time since early March. The yield, which lenders used to price rates on mortgages and other loans, was at 3.86% in midday trading Thursday. It has been mostly bouncing around 3.79% this week following mixed economic retail sales and labor market data.

Inflation has been on the way down since last summer, which has many on Wall Street expecting the Federal Reserve’s next hike to interest rates, expected next week, will the the last of this cycle.

“As inflation slows, mortgage rates decreased this week,” said Sam Khater, Freddie Mac’s chief economist.

Fed’s Interest Rate Hikes

High inflation has driven the Federal Reserve to jack up interest rates since early last year. Beginning with its first hike in March 2022, the central bank has lifted its benchmark interest rate to about 5.1%, its highest level in 16 years, before forgoing a hike at its meeting of policymakers last month.

Factors Influencing Home Loan Rates

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.

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The average rate on a 30-year mortgage remains more than double what it was two years ago, when ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.

The dearth of properties on the market is also a big reason home sales are down 23% over the past six months.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, also fell this week, slipping to 6.06% from 6.30% last week. A year ago, it averaged 4.75%, Freddie Mac said.