The average rate on a 30-year fixed mortgage fell this week as potential homebuyers and investors turn their attention to the Federal Reserve’s interest rate decision on Wednesday.

At 6.2%, the rate dropped slightly compared to 6.35% a week earlier, according to Freddie Mac data released Thursday. It’s down from 7.18% a year ago and sits at the lowest level since February 2023.

The average rate on a 15-year fixed mortgage was 5.27%, down from 5.47% last week and 6.51% last year.

“Rates continue to soften due to incoming economic data that is more sedate,” Sam Khater, Freddie Mac’s chief economist, said in a statement. But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.

Read more: Mortgage and refinance rates today, September 12, 2024: Lowest 30-year rate since 2023

Mortgage rates have slid steadily in recent months, but the relief for buyers has done little to boost home sales nationwide. The Pending Homes Sales Index, a measure of housing contracts, slipped in July to 70.2, the lowest reading since the National Association of Realtors began tracking it more than two decades ago. A year ago, the index stood at 76.7. A level of 100 is equal to contract activity in 2001.

The number of people seeking mortgages has also been relatively anemic. Mortgage applications to purchase a home rose 2% from a week earlier, according to Mortgage Bankers Association data released on Wednesday, but are still trailing levels seen a year ago.

Applications to refinance a mortgage rose 1% week over week and are more than double last year’s volume, according to the MBA. While lower rates have helped some homeowners save money by refinancing, the pool of potential savers is limited because many borrowers have mortgages with sub-5% interest rates, Joel Kan, MBA’s deputy chief economist, said in a statement.

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Some buyers may be waiting in hopes that mortgage rates will fall further if the Federal Reserve cuts benchmark interest rates as expected next week. Signs of a slowing job market and cooling inflation in August have strengthened the case for the central bank to ease rates for the first time in more than four years.

“This is a substantial savings in comparison to October 2023” when mortgage rates hit nearly 7.8%, said Jessica Lautz, deputy chief economist at the National Association of Realtors. “This could save a homebuyer more than $4,000 on an annual basis."

"One thing that homebuyers have to keep in mind," she added, "is that nearly everyone is expecting that the Fed is going to cut rates in September and so with that, the mortgage market has already anticipated those changes.”