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(Bloomberg) -- US mortgage rates edged up to just shy of 7% at the turn of year and a gauge of home-purchase applications tumbled to the lowest level since February, adding to evidence of a struggling housing market.

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The contract rate on a 30-year mortgage rose 2 basis points to a six-month high of 6.99% in the period ended Jan. 3, according to Mortgage Bankers Association data released Wednesday. Over the last four weeks, home financing costs have increased nearly one third of a percentage point.

The group’s index of home-purchase applications declined 6.6%. The refinancing gauge increased 1.5%. While the figures are adjusted for seasonal effects, they are still prone to wide swings around the holidays.

Mortgage rates track US Treasury yields, which are soaring in the new year amid strong economic data, the prospect of fewer interest-rate cuts by the Federal Reserve and concerns that the Trump administration will fan inflation. Weak demand at Treasury auctions this week, as well as heavy corporate debt issuance, is also pushing up yields and suggests mortgage rates will keep marching higher.

That helps explain why investors have soured on the housing industry’s prospects. An S&P composite index of 18 homebuilders has slumped about 20% since the end of November to a six-month low.

High borrowing costs and still-elevated home prices are weighing on affordability, particularly for those looking to become first-time homeowners.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

--With assistance from Molly Smith.

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