McLEAN, Va. — Mortgage rates fell for the first time in more than two months as buyers continue to be stifled by high prices and limited supply.

Mortgage buyer Freddie Mac reported Thursday that the benchmark 30-year loan rate dipped to 3.13% this week from 3.18% last week. At this time last year, the long-term rate was 3.33%.

The rate for a 15-year loan, popular among those looking to refinance, fell to 2.42% from 2.45% last week. One year ago it was 2.77%.

Mortgage rates have been historically low for years, but strong demand and low inventory have pushed prices higher.

Last week the National Association of Realtors reported that its index of pending home sales tumbled 10.6% to 110.3 in February, its lowest level since May of 2020. Contract signings are now slightly behind where they were last year after eight straight months of year-over-year gains.

Pandemic Fueled Demand for More Space

Meanwhile, U.S. home prices rose at the fastest pace in seven years in January, according to the S&P CoreLogic Case-Shiller 20-city home price index. The pandemic has fueled demand for single-family homes as people look for more space.

Economists expect home loan rates to remain low as the Federal Reserve says it intends to keep its main borrowing rate near zero until the economy recovers from the coronavirus pandemic.

Also Thursday, the Labor Department reported that the number of Americans applying for unemployment benefits rose last week to 744,000, signaling that many employers are still cutting jobs even as more people are vaccinated against COVID-19 and state and local governments lift virus restrictions.