U.S. mortgage applications fell to an 11-month low last week on a drop in demand for loans to buy homes, suggesting a slowdown in the housing market, according to industry data Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week to Dec. 16 fell 4.0 percent to 594.6 from 619.3 the week before.

The group's seasonally adjusted index of applications for mortgages to buy homes fell 5.2 percent to 453.1 from the previous week's 477.9.

The index is considered a timely gauge of U.S. home sales.

"Housing has passed its peak," said Robert Brusca, chief economist at Fact and Opinion Economics.

The jury is still out on whether the U.S. housing sector will wind down gradually from its unprecedented boom of recent years or contract sharply and hurt the overall economy.

This week's housing results have been mixed.

In addition to falling loan demand, U.S. home builder optimism fell in December to its lowest since April 2003, according to the National Association of Home Builders.

On the other hand, the government said housing construction accelerated more than expected in November, helped by mild weather, as housing starts rose 5.3 percent from October to an annualized 2.123 million units.

Total loan applications dropped to the lowest since the week ended Jan. 7, when the index reached 587.8, although home borrowing costs fell for a second straight week.

Interest rates on 30-year fixed-rate mortgages, excluding fees, averaged 6.22 percent, down 0.06 percentage point from the previous week's 6.28 percent.

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but below its 6.33 percent high in the week of Nov. 11.

Rates on one-year adjustable-rate mortgages decreased to 5.41 percent from 5.50 percent.

The group's seasonally adjusted index of refinancing applications dropped 1.6 percent to 1,418.1 compared with 1,441.8 the previous week. Volume was at its lowest since the week ended June 25, 2004, when the index reached 1,386.9.