Average fixed mortgage rates in the U.S. edged down in the latest week, reversing direction after two straight weeks of increases, according to mortgage-finance company Freddie Mac (FMCC).

Freddie Mac Chief Economist Frank Nothaft noted in a statement Thursday that recent data showed declines in May for housing starts, a gauge of new-home construction, and building permits, an indicator of future construction. Consumer prices were also up more than expected for May, he added.

For the week ended Thursday, the 30-year fixed-rate mortgage averaged 4.17%, compared with 4.2% a week earlier and 3.93% a year earlier. Rates on 15-year fixed-rate mortgages averaged 3.3%, compared with 3.31% the previous week and 3.04% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARMs, on average, were at 3%, compared with 3.05% the previous week and 2.79% a year earlier. One-year Treasury-indexed ARM rates on average were 2.41%, compared with 2.4% the previous week and 2.57% a year earlier.

Write to Tess Stynes at tess.stynes@wsj.com

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