LOS ANGELES >> The average long-term U.S. mortgage rate slipped after climbing for five consecutive weeks to a 21-year high, a modest relief for would-be homebuyers challenged by rising home prices and a thin inventory of homes on the market.

Mortgage buyer Freddie Mac said today that the average rate on the benchmark 30-year home loan fell to 7.18% from 7.23% last week. A year ago, the rate averaged 5.66%.

The average rate is now the lowest it’s been in two weeks, but remains above 7%. High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans. They also discourage homeowners who locked in low rates two years ago from selling.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, was 6.55%, unchanged from last week. A year ago, it averaged 4.98%, Freddie Mac said.

Mortgage rates climbed for much of August along with the 10-year Treasury yield, which is used by lenders to price rates on mortgages and other loans.

The yield, which last week neared its highest level since 2007, rose sharply as bond traders reacted to reports showing the U.S. economy remains remarkably resilient. That’s stoked worries that the Federal Reserve will conclude that it needs to keep interest rates higher for longer in order to crush inflation.

But this week, the 10-year Treasury yield has been falling following economic reports showing consumer confidence tumbled in August and job openings fell to the lowest level since March 2021. The government today reported that its personal consumption and expenditures report, a measure of inflation closely tracked by the Federal Reserve, remained low in July.

The central bank held rates steady at its last meeting and is expected to do the same in September.

“Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes,” said Sam Khater, Freddie Mac’s chief economist.

High inflation drove the Federal Reserve to raise its benchmark interest rate 11 times since March 2022, lifting the fed funds rate to the highest level in 22 years. While mortgage rates don’t necessarily mirror the Fed’s rate increases, they tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.

The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.87%. Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property.

The lack of housing supply is also weighing on sales of previously occupied U.S. homes, which are down 22.3% through the first seven months of the year versus the same stretch in 2022.