Mortgage rates slipped this week, but homebuyers are waiting for a more significant drop before entering the expensive housing market.

The average rate for 30-year mortgages remained below the 7% mark, but not by much, settling at 6.91% on Thursday, according to Mortgage News Daily.

Another measurement tracking weekly average rates for the 30-year loan inched down to 6.79% from 6.87% a week prior, according to Freddie Mac.

However, homebuyers largely dismissed this week’s drop as they wait for the Federal Reserve to cut rates, which is a possibility at the central bank’s June meeting. Not only would financing be cheaper, but more sellers could also be prompted to list their homes — a dual benefit for those who have been sidelined by affordability challenges.

“Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.

Read more: Mortgage rates remain just below 7% — is this a good time to buy a house?

Homebuyers anticipating relief

The volume of both mortgage applications and home-purchase applications was flat the past week due to consumers expecting easing affordability later this year.

“Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually,” Kan said. “Similarly, with rates remaining elevated, there is very little incentive right now for rate/term refinances.”

Many buyers, especially first-time homebuyers, need a break in housing costs. National home prices grew 6% year over year in January, according to S&P CoreLogic Case-Shiller.

That was the "fastest annual rate since 2022," said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices.

Southern California heats up

Topping the home price growth chart were two cities in Southern California — San Diego reported the highest yearly gain among 20 cities with an 11% increase in January. Los Angeles followed with an increase of nearly 9%. Detroit was third at just over 8%.

In Los Angeles, the prospect of rate cuts encouraged homebuyers to return to the market. Instead of waiting like the rest of the country, buyers in this competitive market want to secure homes now.

“It's getting more competitive now in Los Angeles because the Fed announced a few months ago that they were going to drop rates,” Nicole Han, a Realtor based in Los Angeles, told Yahoo Finance, “so people are trying to lock in [a home] and then just refinance.”