(Reuters) - U.S. applications for home mortgages declined last week as refinancing dropped to its lowest level since February 2020 with fewer homeowners able to take advantage of lower rates during a holiday-shortened week. The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market index fell 3.1% in the week ending June 4 from a week earlier. This reflected a 5.1% decline in applications for refinancing and was 27% lower than the same week one year ago. The purchase index increased 0.3% from a week earlier. The week’s data included an adjustment for the Memorial Day holiday. “Home-price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy, and housing demand far outpacing supply,” Joel Kan, an economist at the MBA, said in a statement. Surging home prices and limited supply has put a lid on home sales recently, and a record-low percentage of U.S. consumers believe now is a good time to purchase a home. The average contract interest rate for traditional 30-year mortgages decreased to 3.15% last week from 3.17% the prior week. Reporting by Evan Sully; Editing by Chris Reese Our Standards: The Thomson Reuters Trust Principles.