WASHINGTON D.C. – Mortgage applications have decreased as potential homebuyers express growing unease regarding the economic outlook. Despite relatively stable interest rates, the housing market is showing signs of cooling.

According to the Mortgage Bankers Association (MBA),applications for mortgages to purchase homes fell by 4% last week,adjusting for seasonal variations. While overall volume is 3% higher than the same period last year, it’s vital to note that interest rates were substantially higher at that time.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) edged down slightly from 6.90% to 6.89%. Points increased marginally to 0.67 from 0.66, which includes the origination fee for loans with a 20% down payment. This rate is 40 basis points lower compared to the same week last year.

“Mortgage application activity,particularly for home purchases,continues to be subdued by broader economic uncertainty and signs of labor market weakness,dropping to the slowest pace since February,” said Joel Kan,vice president and deputy chief economist at the MBA. “With slowly-increasing housing inventory in many markets and first-time homebuyers still in the mix, FHA purchase applications fared better with only a slight decline.”

Applications to refinance home loans also experienced a 4% decrease for the week, although they remain 42% higher than the same week last year.

“Refinance activity dipped again, as mortgage rates remained close to 7%, and borrowers hold out for a bigger decline in rates. Given the pullback in refinancing, the average loan size for refinances declined to just under $290,000, the lowest level in three months,” Kan added.

Mortgage rates are expected to fluctuate this week as new economic data is released, culminating in the monthly employment report on Friday.

“mortgage application activity, particularly for home purchases, continues to be subdued by broader economic uncertainty and signs of labor market weakness…”