Homebuyers face higher mortgage rates and decreased demand.

Mortgage applications to purchase a home dropped 10% from the week before as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.43% from 6.30% the previous week. Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act. Applications to refinance a home loan decreased 6% from the previous week and were 56% lower than a year ago.