Long-term mortgage rates fell over the past week, reigniting demand for home purchases and breathing new life into what has been a stagnant housing market.

The Mortgage Bankers Association (MBA) reported Wednesday that mortgage applications jumped 6.3% overall from the week before, driven by an increase in purchase demand, which was up 52% from a year ago.

The surge in purchase applications comes as mortgage rates fell for the first time in two months, MBA noted. Still, the decline in rates was only slight, and the affordability crisis continues to drag heavily on the housing market.

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Freddie Mac's latest Primary Mortgage Market Survey, also released Wednesday, showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.81% from last week's reading of 6.84%. The average rate on a 30-year loan was 7.22% a year ago.

"The 30-year fixed-rate mortgage moved down this week, but not by much," said Sam Khater, Freddie Mac’s chief economist. "Rates have been relatively flat over the last few weeks as the market waits for more clarity on specific economic policies."

"Potential homebuyers are also waiting on the sidelines, causing demand to be lackluster," Khater added. "Despite the low sales activity, inventory has only modestly improved and remains dramatically undersupplied."

Many would-be buyers and sellers are holding out to see if rates fall further. Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.

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The average rate on the 15-year fixed mortgage rose to 6.10% from 6.02% last week. One year ago, the rate on the 15-year fixed note averaged 6.56%.