WASHINGTON — Mortgage applications in America jumped to the highest level in more than a year as lower mortgage rates spurred home purchases and refinancing.

The Mortgage Bankers Association’s index of applications to buy a home or refinance an existing loan rose 11.4% to 721.2 last week, the highest since October 2005. The increase followed an 8.1% rise in the prior week.

Tumbling mortgage rates and cheaper homes are spurring housing demand, driving applications for loans to purchase real estate to a 10-month high. The data suggest the “substantial” weakening of the housing market the Federal Reserve cited in a statement yesterday is nearing an end.

“The end is in sight,” the chief economist of the mortgage bankers group, Doug Duncan, said. “There’s a series of things that seem to be indicating the worst is over,” he said, citing shrinking inventory of unsold homes and a stabilization in the rate of new-home sales.

The Mortgage Bankers Association’s purchase index rose 8.7% last week to 463.8,the second-highest level this year, from 426.6. The measure of refinancing increased 15.8% to 2304.4, the highest since September 2005, from 1989.7.

A separate report yesterday showed retail sales rose more than forecast in November. The 1% increase was the first in four months, according to the Commerce Department. Sales excluding motor vehicles rose by the most since January.

Fed policy makers on Tuesday voted to keep their benchmark interest rate at 5.25% for a fourth straight meeting, and noted a “mixed”economic performance with inflation risks still at hand.

“Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market,” the members of the Fed’s Open Market Committee said.