Demand for mortgages is dropping and so are interest rates

House hunters are seeing a bright spot in the market this month, as mortgage rates have dropped slightly and the amount of homes available for purchase has increased. 

Housing inventory, the industry's term for the number of homes for sale, grew 29% compared to a year ago, according to data from Realtor.com. Meanwhile, the average rate for a 30-year fixed mortgage fell to 5.3% this week, according to Freddie Mac, from 5.8% two weeks ago. 

The rate drop is positive news for homebuyers, but it's still a far cry from the below 3% figures buyers saw last July, said Realtor.com chief economist Danielle Hale.