Mortgage rates in the U.S. fell this week, switching direction after five weeks of increases.

The average interest rate for a 30-year, fixed loan was 7.09%, down from 7.22% last week, Freddie Mac said in a statement Thursday.

Homebuyers are getting a bit of a break during what’s typically the busiest time of year for transactions. Applications for purchase loans rose in the week through May 3, Mortgage Bankers Association data show, suggesting that any drop in borrowing costs is likely to spark an uptick in demand.

Signs of a cooling labor market have bolstered expectations that the Federal Reserve may make its first interest-rate cut as soon as July. After policymakers’ most recent meeting, Fed Chair Jerome Powell didn’t offer a time frame for any potential reductions, but he calmed traders’ fears by saying further hikes are “unlikely.”

“Whether this week’s friendlier mortgage-rate momentum will persist in the near term depends largely on April inflation data due out next week,” said Danielle Hale, chief economist for Realtor.com.

Mortgage rates stuck at more than double where they started in 2022 have pushed many house hunters to the sidelines. High purchase prices also remain an obstacle thanks to a persistent shortage of available homes. Among those listed for sale, many need significant repairs or updates — a costly proposition, especially for first-time buyers.

“Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment.”