U.S. home prices continued to rise in May, but the pace remained modest as higher borrowing costs weighed on buyers. Fresh data showed national prices were up 3.2% from a year earlier, extending a pattern of gradual gains rather than the sharp increases seen in earlier housing booms.

At the same time, mortgage costs moved in the opposite direction. The average rate on a 30-year fixed loan increased to 6.78%, according to the latest market figures, making monthly payments more expensive for would-be buyers and adding pressure to affordability.

The combination of steady price growth and elevated rates suggests a housing market still constrained by limited supply and weaker purchasing power. For many households, especially first-time buyers, the path to ownership remains difficult even as price increases cool from previous peaks.

The latest readings from Freddie Mac and the S&P CoreLogic Case-Shiller index point to a market balancing between resilient demand and tighter financing conditions. Unless rates ease meaningfully, affordability is likely to remain one of the central challenges in the U.S. housing market.