Mortgage rates

Price levels "remained highly elevated," but nine districts reported some degree of moderation in their rate of increase, the report showed. The price of food, rent, utilities and hospitality services, in particular, rose substantially across all 12 Fed districts.

Higher mortgage rates have led to a sharp slowdown in cash-out refinances. Second mortgages were up nearly 50% in the first five months of the year as homeowners looked for new ways to borrow against their equity.

Comments from Federal Reserve officials in Jackson Hole last week have markets bracing for further tightening of monetary policy in the near term.

Better-than-expected economic data helped lead to the steep acceleration of the 30-year average, while the 15-year also shot up.

The decline continues the trend of seesaw movements, coming just a week after economic worries led averages to surge.

While fewer units are being sold and inventory is rising, both Remax and First American are upbeat about buyer demand remaining strong.

After falling earlier in the month on expectations of less aggressive monetary policy, inflation concerns early in the week drove averages higher.

Economists disagree on whether the latest numbers will mean the Fed will increase rates by 50 or 75 basis points.

Rates are expected to increase to 3.75% to 4% by the end of the year, and it's anticipated to stay high for longer.

The 30-year average has declined by 55 basis points in two weeks.