Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania, said higher interest rates on mortgages tend to depress home buying, but that demand is not as sensitive to changes in rates as it is in refinancing activity.

"Even though mortgage rates are rising, they still remain quite affordable," she said.

"The bigger obstacle to home buying is job losses and tight qualifying conditions for borrowing," she said.

With the U.S. unemployment rate at 9.4 percent, many potential home buyers who have lost or who fear they may lose their jobs remain sidelined even though home affordability has improved significantly.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.38 percent, up 0.21 percentage point from the previous week. It was the highest rate since the week ended June 19 and significantly above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

Interest rates a year ago were at 6.57 percent.

Mortgage rates were above 5 percent for an 11th straight week. Some experts say rates at 5 percent and below are needed to make a significant impact on home loan demand.

The MBA's seasonally adjusted purchase index rose 1.1 percent to 267.2, the third, albeit small, gain in the last four weeks.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7 percent.