Mortgage interest rates and home prices are continuing to surge, turning the American dream into what seems like an impossible goal for many first-time homebuyers. Welcome to the already fraught spring housing market.

Rates jumped to an average of 4.42%—the highest they’ve been in more than three years—and they’re expected to keep climbing. The rates were for 30-year fixed-rate loans in the week ending on March 24, according to Freddie Mac. Just a year ago, rates were more than a full percentage point lower, at 3.17%.

While that might not seem like much of an increase, it adds about $375 a month to a buyer’s mortgage payment. Over a 30-year loan, buyers will pay about $135,000 more than they would have just a year ago. This assumes they purchased a median-priced home of $392,000 with 20% down and a 30-year fixed-rate loan. The rate changes will cost buyers who take out larger loans even more.

“We are approaching a tipping point for housing markets, as an increasing number of buyers are being priced out by rising rates, stagnating real wages, and fast-paced inflation,” George Ratiu, manager of economic research for Realtor.com®, said in a  statement.

“The window of record-breaking mortgage rates has closed, and the road ahead points to a return toward rates more typical of the past two decades,” Ratiu continues. “For buyers and sellers, this spring will offer a period of transition, in which high prices will combine with rising interest rates to challenge budgets already contending with high inflation.

“Median home list prices haven’t slowed down in response to the increasing rates—and housing experts are divided on if they will,” he adds.

Home prices were 14.2% higher than they were just a year ago in the week ending March 19, according to the most recent Realtor.com data.

The number of homes for sale remains so low that prices could remain high. Inventory was down 18% from the same time last year, when the nation was already grappling with a severe shortage of homes on the market, according to Realtor.com. Homes also sold 10 days faster than they did the same time a year ago.

In addition, home sellers aren’t exactly lowering prices in response to the higher rates. Instead, more buyers are being priced out of homeownership. This is likely to result in fewer sales.

“As mortgage rates surge and buyers drop out of the market, housing will go through an adjustment period with sticky home valuations, while sellers will be reluctant to let go of record-high prices,” says Ratiu.

Rates are expected to keep rising as well. That’s because they typically follow the federal short-term interest rate. And the U.S. Federal Reserve recently raised those rates and is expected to raise them several times more this year to combat soaring inflation.

“Rising inflation, escalating geopolitical uncertainty, and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the market.”

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