(Bloomberg) -- Mortgage rates in the US dropped for the first time in three weeks. 

The average for a 30-year loan slipped to 5.3% from 5.54% last week, Freddie Mac said Thursday in a statement. That’s a level last seen the week of July 7.

Rates that have climbed from 3.11% at the end of last year are cooling the once-overheated US housing market. Pending sales of homes in June fell by the most since April 2020. PulteGroup Inc., a national builder based in Atlanta, reported earlier this week that cancellations of home orders have ticked up.

“Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk and declining consumer confidence take a toll on homebuyers,” said Sam Khater, Freddie Mac’s chief economist. “As the market adjusts to a higher-rate environment, we are seeing a period of deflated sales activity until the market normalizes.”

The torrid pace of pandemic-era price gains is starting to ease, with the S&P CoreLogic Case-Shiller index showing a slight deceleration in May. 

“Higher borrowing costs have already hit the real estate landscape, and are having a noticeable impact on demand,” said George Ratiu, Realtor.com’s manager of economic research. “We can expect the rebalancing in housing markets to continue and to pick up speed, especially as we look toward the fall and winter seasons.”

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