Mortgage rates slipped again this week, a positive move for potential house hunters.

The average rate on the 30-year fixed-rate mortgage fell to 6.46% from 6.49% last week, Freddie Mac reported on Thursday. A year ago, the average rate on a 30-year fixed-rate loan was 7.23%.

Separately, the average rate for the 15-year fixed mortgage was 5.62%, down from 5.66% a week prior. The rate on a 15-year loan was 6.55% a year ago.

“Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year,” Sam Khater, Freddie Mac’s chief economist, wrote in a statement.

That expectation seems to have the market in a holding pattern.

“Earlier this month, rates plunged and are now lingering just under 6.5 percent, which has not been enough to motivate potential homebuyers. We expect rates likely will need to decline another percentage point to generate buyer demand," the economist added.

Read more: Mortgage and refinance rates today, August 22, 2024: Rates are over 50 points lower than 52-week average

Over the past several weeks, the housing market has been buoyed by expectations the Fed will start cutting interest rates at its next meeting in September. Cooling inflation readings and a slowdown in the labor market have also bolstered the case for lower rates.

However, many buyers remain on the fence. Applications to purchase a home decreased 5% from last week, marking the lowest level since February, per data from Mortgage Bankers Association (MBA) released Wednesday.

Homeowners are taking a breather too. Applications to refinance an existing home loan fell 15% from the previous week, but volume remains a whopping 90% higher than the same week a year ago, according to MBA, when rates were hovering above 7%.

"Despite the continued decline in rates, applications to refinance and buy a home both fell last week, which may be an indication that some prospective borrowers are hoping that rates decrease even more before they decide to apply," MBA President and CEO Bob Broeksmit wrote in a statement.

Read more: Want to refinance your mortgage? Here are 7 home refinance options.

Meanwhile, some house hunters returned to the market with mortgage rates at their lowest levels since February. Existing home sales advanced 1.3% from June to a seasonally adjusted annual rate of 3.95 million, the National Association of Realtors said Thursday, stopping a four-month sales decline that began in March.

But strained affordability continues to impact buyers' confidence. Fannie Mae’s Home Purchase Sentiment Index, measuring consumer sentiment about the residential housing market, fell in July. The drop underscores how the lack of affordability is dampening housing activity.