The U.S. economy slowed during the second quarter while mortgage rates climbed to their highest level in a year, creating a mixed picture in which households continued spending but faced renewed pressure from elevated borrowing costs and inflation.

Real gross domestic product increased at a 1.5% annualized rate from April through June, according to the Bureau of Economic Analysis’ advance estimate. That marked a deceleration from the 2.1% growth rate recorded during the first quarter and fell short of expectations for a stronger expansion.

The headline figure, however, did not indicate a broad collapse in domestic demand. Consumer spending, private investment and exports all increased. Those gains were partly offset by declining government spending, while imports rose and therefore subtracted from the GDP calculation.

Consumer spending accelerated to a 3.2% annual rate after increasing just 0.5% in the first quarter, according to the Associated Press account of the government data. Household consumption represents roughly two-thirds of U.S. economic activity, making the rebound an important source of support for companies in retail, travel, financial services and other consumer-facing sectors.

Business investment also remained comparatively strong. Nonresidential investment rose at an 8.4% pace, supported in part by spending on equipment, software, research and information-processing technology. The figures point to continued corporate investment in artificial intelligence and other productivity-oriented technologies even as executives contend with uncertainty surrounding energy prices, inflation and interest rates.

A measure that strips away some of the volatility associated with trade and government activity offered a firmer assessment of underlying demand. Real final sales to private domestic purchasers, which combines consumer spending and gross private fixed investment, increased at a 3.9% annual rate. That was more than double the 1.7% increase registered in the first quarter.

Inflation remained a central concern. The price index for gross domestic purchases rose at a 5.7% annualized rate in the second quarter, compared with 3.6% in the first quarter. The personal consumption expenditures price index increased 5.1%, while the measure excluding food and energy rose 3.4%. The figures reinforced the Federal Reserve’s assessment that inflation remained above its 2% objective.

The central bank held the federal funds target range at 3.5% to 3.75% at its July meeting. The decision passed by a 9-3 vote, with Federal Reserve officials Beth Hammack, Neel Kashkari and Lorie Logan favoring a quarter-percentage-point increase. The unusually divided vote showed that some policymakers believed additional tightening was needed to counter persistent price pressures.

For households, the most immediate evidence of tight financial conditions appeared in the housing market. Freddie Mac said the average rate on a 30-year fixed mortgage rose to 6.66% in the week ending July 30, up from 6.58% one week earlier. Rates increased for a fourth consecutive week and reached the top of their 52-week range.

The 30-year average remained slightly below the 6.72% level reported a year earlier, but it has risen substantially since falling below 6% in February. The average 15-year fixed mortgage rate also increased, reaching 6.04% from 5.96% the previous week. A year earlier, the 15-year average was 5.85%.

Mortgage rates are not set directly by the Federal Reserve. They generally respond to longer-term Treasury yields, inflation expectations and investors’ assessments of economic risk. As concerns about inflation and energy costs pushed bond yields higher, mortgage borrowing costs rose even though the central bank left its short-term policy rate unchanged.

The increase represents another obstacle for prospective buyers. High rates increase monthly payments and reduce the amount households can borrow, while home prices remain elevated in many markets. They also discourage existing homeowners with low-rate mortgages from selling, limiting the supply of properties available for purchase and reducing transaction volumes for real estate brokers, mortgage lenders and related businesses.

Builders face a similarly complicated environment. Limited inventories of existing homes can support demand for new construction, but high financing costs constrain buyers and raise the expense of funding land purchases, development and construction. Residential investment was among the weaker areas of the broader investment picture during the quarter.

Consumer sentiment also showed signs of strain. The Conference Board’s Consumer Confidence Index declined to 90.8 in July from an upwardly revised 92.2 in June. Its Present Situation Index fell for a third consecutive month, while the Expectations Index remained below the level historically associated with recession concerns.

Higher energy costs added to pressure on household budgets. AAA reported that the national average for regular gasoline stood at about $4.11 a gallon on July 31, up from roughly $3.85 a month earlier and $3.15 a year earlier. More expensive fuel can affect consumer spending directly and raise transportation, manufacturing and delivery costs across the economy.

The labor market nevertheless continued to provide support. Initial applications for unemployment benefits increased by 9,000 to 197,000 in the week ending July 25, according to the Labor Department, but remained low by historical standards. The four-week average declined to 202,750, indicating that widespread layoffs had not emerged despite slower headline growth.

Taken together, the figures describe an economy that is expanding but becoming more uneven. Consumers and businesses are still spending, unemployment claims remain restrained and private domestic demand is growing. Yet inflation, expensive credit and weak housing affordability are limiting the benefits that households experience from that expansion.

The GDP estimate is preliminary and will be revised as additional trade, inventory, construction and corporate data become available. The Bureau of Economic Analysis is scheduled to release its second estimate, along with initial second-quarter corporate profit figures, on August 26.

Until then, businesses and investors will focus on whether consumer spending can remain strong as borrowing and energy costs rise. For the housing sector, the path of Treasury yields and inflation expectations will be particularly important. A sustained decline in long-term rates could improve affordability, but the latest readings suggest meaningful relief for homebuyers has not yet arrived.