The average rate on a 30-year mortgage eased this week to the lowest level in 15 months, providing some hope for home shoppers navigating a housing market that remains out of reach for many Americans.

The rate fell to 6.46% from 6.49% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.23%.

The average rate is now the lowest it’s been since mid-May last year, when it was 6.39%.

Borrowing costs on 15-year fixed-rate mortgages also fell this week, good news for homeowners seeking to refinance their home loan at a lower rate. The average rate fell to 5.62% from 5.66% last week. A year ago, it averaged 6.55%, Freddie Mac said.

Mortgage rates are expected to continue trending lower overall this year, as signs of waning inflation and a cooling job market have raised expectations that the Federal Reserve will cut its benchmark interest rate next month for the first time in four years.

“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,” said Sam Khater, Freddie Mac’s chief economist.

After jumping to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly hovered around 7% this year — more than double what it was just three years ago. But this month, the average rate has made its biggest downshift in more than a year, sliding to around 6.5%. The pullback has sparked a pickup in applications for home refinancing loans, while applications for home purchase loans have lagged.

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

Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have sidelined many prospective homebuyers who have been priced out of the market given the double whammy of high borrowing costs and home prices that reached a record in June.  

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” Mark Hamrick, senior economic analyst at Bankrate, said in a recent article. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”