Nearly 5.5 million more households are priced out of the housing market today than a year ago, NAR data shows.

The 30-year fixed-rate mortgage rose again this week, averaging 6.79% and forcing more home buyers to recalculate their budget. Mortgage applications for home purchases are falling—down 31% year over year, according to the Mortgage Bankers Association. But economists say mortgage rates are likely to drop in upcoming weeks, which could help alleviate some of the affordability pressure on home buyers.

The jump in rates this week was due to a “buoyant economy” that has “prompted the market to price-in the likelihood of another Federal Reserve rate hike,” says Sam Khater, Freddie Mac’s chief economist. “Although there has been a steady flow of purchase demand when rates are in the low- to mid-6% range, that demand is likely to weaken as rates approach 7%.”

Nearly 5.5 million more households are priced out of the housing market today than a year ago, says Nadia Evangelou, senior economist and director of real estate research at the National Association of REALTORS®. “Although there are fewer buyers, more than one-third of properties are sold above their list price due to limited inventory—especially [in price points] that first-time buyers can afford,” Evangelou says.

She adds that she’s hopeful mortgage rates will reverse course in the coming weeks. NAR has been predicting rates to stabilize near 6% in the second half of the year.

Evangelou notes two factors that would help rates fall: positive progress with the debt ceiling deal and a pause on the Federal Reserve’s rate hikes. “Although these two factors do not directly affect mortgage rates, they affect the economy—and eventually mortgage rates,” she says.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 1:

  • 30-year fixed-rate mortgages: averaged 6.79%, rising from last week’s 6.57% average. Last year at this time, 30-year rates averaged 5.09%.
  • 15-year fixed-rate mortgages: averaged 6.18%, up from last week’s 5.97% average. A year ago, 15-year rates averaged 4.32%.