NEW YORK >> The average rate on the popular 30-year mortgage rate fell to 6.73% this week, its lowest level since February as the bond market reacted to signs of cooling inflation.

The 30-year fixed-rate mortgage was 5 basis points lower than a week earlier when it averaged 6.78%, mortgage finance giant Freddie Mac said today. It averaged 6.90% during the same period a year ago.

“Apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind,” Chief Economist Sam Khater said in a statement.

But, he said, data showing a moderation in home price growth and increasing housing inventory are positive signs for prospective home buyers.

House prices increased 5.7% year-on-year in May, the smallest annual increase in 10 months as still-high mortgage rates then kept a lid on demand, the Federal Housing Finance Agency said Tuesday.

More recently, though, pending home sales surged 4.8% in June from a month earlier, helped by the recent increase in homes for sale, the National Association of Realtors said on Wednesday.

Still, even with home loan rates now more than 1 percentage point below their peak levels from last year, mortgage application volumes remain subdued.

“Many borrowers may be hoping and waiting for mortgage rates to decline even further, which is what we expect to happen once the Federal Reserve begins to cut short-term rates,” Mortgage Bankers Association Chief Executive Bob Broeksmit said in a statement.

If inflation continues to cool, the Fed could cut interest rates as soon as September, Chair Jerome Powell said Wednesday.