Mortgage rates for 30-year U.S. loans fell from an almost five-month high, lowering borrowing costs as the housing market gains strength.

The average rate for a 30-year mortgage declined to 3.99 percent in the week ended today, from 4.08 percent, which was the highest since Oct. 27, according to Freddie Mac. (FMCC) The average 15-year (NMCM15US) rate decreased to 3.23 percent from 3.3 percent, the McLean, Virginia-based mortgage-finance company said in a statement.

Demand for houses, bolstered by a growing economy, has improved in the past year. New homes sold at an annual pace of 313,000 last month, up 11 percent from February 2011, while down 1.6 percent from January, the Commerce Department said March 23. The number of contracts to buy previously owned houses jumped 14 percent in February from a year earlier, the National Association of Realtors reported.

“The housing market and the overall economy are stabilizing,” Stuart Miller, chief executive officer of Lennar Corp. (LEN), told analysts March 27 after the company reported first- quarter results that included a 33 percent jump in new home orders. “A very real trend is beginning to take shape.”

The Mortgage Bankers Association’s index of home-loan applications declined 2.7 percent in the period ended March 23, the Washington-based trade group said yesterday. The measure of refinancing decreased 4.6 percent, while the purchase gauge rose 3.3 percent.

To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net