Mortgage rates declined to their lowest point since February 2023

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Mortgage rates fell this week to the lowest levels in over a year and a half, but elevated rates and high home prices are still keeping would-be buyers and sellers out of the housing market.

Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.20%, down from the 6.35% reading of the past two weeks. The average rate on a 30-year loan was 7.18% a year ago.

A "For Sale" sign sits in front of a home in San Jose, California, on Sept. 5. (David Paul Morris/Bloomberg via Getty Images / Getty Images)

"Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023," said Sam Khater, Freddie Mac’s chief economist.

"Rates continue to soften due to incoming economic data that is more sedate," Khater continued. "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."

Many would-be buyers and sellers are holding out to see if rates fall further. Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.

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The average rate on the 15-year fixed mortgage declined to 5.27% from 5.47% last week. One year ago, the rate on the 15-year fixed note averaged 6.51%.