Demand for mortgages took a hit in the past week.
Requests for mortgage applications fell 4.2%, according to the Mortgage Bankers Association's weekly survey.
Interest in refinancing fell as well by 7% compared with the prior week.
However, people still want to buy homes as the seasonally adjusted purchasing index increased by 2%, despite rising mortgage rates.
After a slow April, the demand for purchasing applications rose for the second time in three weeks.
The average rate on a 30-year mortgage increased to 3.18% from 3.15% in the past week.
"Purchase applications increased for the second time in three weeks, rebounding after a rather weak April with mostly weekly declines', said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "While purchase activity was around 4 percent lower than a year ago, the comparison is to last spring’s large upswing in activity as pandemic-related lockdowns lifted."
"Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices," added Kan.
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.