NEW YORK (CNN/Money) - The pace of mortgage applications slowed for the second consecutive week even as mortgage rates fell in August, according to the latest report by the Mortgage Bankers Association.

The industry group's seasonally adjusted index of mortgage applications dropped 4.5 percent to 722.5 in the week ended Aug. 26 after falling 0.7 percent the prior week. The index includes both purchase and refinancing loans.

The seasonally adjusted purchase index shed 3.6 percent to 470.6 -- after falling 2.2 percent the previous week -- while the seasonally adjusted refinancing index lost 5.4 percent to 2,187.8. The refinancing index had previously gained 1.2 percent.

Fixed 30-year mortgage rates dropped 0.05 percent to an average of 5.73 percent, down from 5.78 the previous week. It's been a steady decline for the benchmark 30-year rate since it fell from 5.91 percent in the first week of August, and the current rate is well off the 2005 high of 6.08 percent.

The data comes a week after the National Association of Realtors showed that existing home sales have slowed and the Commerce Department indicated that while new home sales jumped in July, the median sales price of new homes fell for the third straight month. The reports suggest there could be some cooling in the otherwise robust housing market.

In concluding remarks to an annual Kansas City Fed symposium on Saturday, Federal Reserve Chairman Alan Greenspan said the housing boom will inevitably slow down.