Mortgage rates in the US rose the most since October as potential buyers face affordability challenges in the housing market.

The average for a 30-year, fixed loan was 6.69%, up from 6.6% last week, Freddie Mac said in a statement Thursday. It was the biggest weekly jump since late October, putting the average rate back near the highest since the middle of December.

House hunters have been squeezed by high mortgage rates and prices that have held up given a persistent shortage of homes listed for sale. But rates are hovering more than one percentage point below a high in October, which bodes well for the market ahead of its typically busiest season, according to Sam Khater, Freddie Mac’s chief economist.

“Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” Khater said in the statement.

Investors are weighing the Federal Reserve’s next steps. The market was readying for the possibility of rate cuts early in 2024 given policymakers’ forecasts, but an acceleration of inflation in December and strong retail sales have raised concerns about how soon the central bank may start. The Federal Reserve is scheduled to meet next week.

Those recent data points “have caused a decline in market confidence regarding the Fed’s readiness to implement interest rate cuts,” said Jiayi Xu, a economist. “In fact, the Federal Reserve is now facing a new challenge: determining the optimal timing for a shift to rate cuts.”

Homebuilders have been using incentives such as mortgage rate buy-downs as a way to attract buyers. D.R. Horton Inc. said it expects to continue to use those offers as buyers are stretched with rates and prices. Mortgage rates dropping in December also helped boost sales of new homes across the US, which rose 8% that month.

This article was provided by Bloomberg News.