Mortgage rates climbed further above 7% this week, complicating the housing market with mixed signals on where home affordability will head next.

The average rate for a 30-year fixed loan reached 7.16% on Thursday and has remained over the 7% threshold every day over the past seven days, according to Mortgage News Daily tracking. The latest average is the highest in two months, matching the highest level since late November.

A separate index tracking the weekly average on a 30-year loan showed a similar story — the weekly average increased 12 basis points to 6.90% from 6.77% a week prior, according to Freddie Mac’s latest release.

Read more: Mortgage rates hover around 7% — is this a good time to buy a house?

So far in 2024, housing market activity remains slow but is expected to accelerate when rates drop. However, resilient economic data — strong labor market and consumer spending — will likely delay the rate cut that many were expecting earlier in the year. That would have a dampening effect on the normally busy spring homebuying season.

"The economy is creating jobs, but this mortgage rate is really hitting affordability limits for many households," Lawrence Yun, chief economist at the National Association of Realtors (NAR), said Thursday. "Certainly, they cannot get a mortgage outside of their budget. So it's not good news."

Demand wanes as high rate stays

Rising mortgage rates again showed up in the level of mortgage activity this week. The volume of mortgage applications decreased more than 10% on a weekly basis, according to Mortgage Bankers Association data. Refinancing applications declined 11%.

Expensive borrowing costs and home prices have curbed buyer demand this season. Redfin’s Homebuyer Demand Index — measured by requests for home tours and other buying services — retreated 18% in February. Chen Zhao, Redfin’s economist research lead, also cited inflation as a culprit for the waning interest.

January’s Consumer Price Index (CPI) increased 0.3% over December and 3.1% over the last year; both measurements were higher than economists' expectations of 0.2% month over month and 2.9% annual increase.

That "...hotter-than-expected inflation report confirms that the Fed is unlikely to cut interest rates next month, which means mortgage rates will stay near 7% for now," Zhao said.

A separate tracking of homebuyer intentions also showed a decline in buying plans. The share of survey participants responding they have "plans to buy a new home within six months" has been dropping over the last two months, according to Apollo Global Management’s US Housing Outlook report published in February 2024. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)