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The average long-term U.S. mortgage rate climbed further above 7 percent this week to its highest level since 2001, another blow to would-be homebuyers grappling with rising home prices and a stubbornly low supply of properties on the market.

Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan climbed to 7.23 percent from 7.09 percent last week. A year ago, the rate averaged 5.55 percent.

It’s the fifth consecutive weekly increase for the average rate, which is now at its highest level since early June 2001, when it averaged 7.24 percent.

High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans. They also discourage homeowners who locked in low rates two years ago from selling.

Economists at combined brokerage and listings portal Redfin estimated Thursday that a buyer looking for a 30-year purchase mortgage on the median-priced American home, selling for $380,000 right now, would cost them $400 more with a 7.36 percent mortgage rate, which the nation’s average mortgage rate hit for one day on Wednesday. That’s $400 more with a 5.5 percent rate like many of last year’s homebuyers received.

And a new analysis by economists at competing listings portal Zillow found that first-time buyers now make up half of all homebuyers as high rates are deterring existing homeowners from selling their current abodes.

Mortgage rates have been rising along with the 10-year Treasury yield, used by lenders to price rates on mortgages and other loans. The yield has been climbing as bond traders react to more reports showing the U.S. economy remains remarkably resilient, which could keep upward pressure on inflation, giving the Federal Reserve reason to keep interest rates higher for longer.

“This week, the 30-year fixed-rate mortgage reached its highest level since 2001 and indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term,” said Sam Khater, Freddie Mac’s chief economist.

High inflation drove the Federal Reserve to raise its benchmark interest rate 11 times since March 2022, lifting the fed funds rate to the highest level in 22 years. It is hoped Fed Chair Jerome Powell will offer hints about how much longer the central bank could keep interest rates high at a conference in Wyoming tomorrow.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.

The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.87 percent. Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property. It’s a key reason new home listings were down nearly 21 percent nationally in July from a year earlier, according to Realtor.com.

The lack of housing supply is also weighing on sales of previously occupied U.S. homes, which are down 22.3 percent through the first seven months of the year versus the same stretch in 2022.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose to 6.55 percent from 6.46 percent last week. A year ago, it averaged 4.85 percent, Freddie Mac said.

Banker & Tradesman staff writer James Sanna contributed to this story.