The National Association of Realtors® (NAR) said consumer confidence is growing across the country, especially in rural and middle America. Its most recent quarterly Housing Opportunities and Market Experience (HOME) survey found the share of households who believed the economy is improving rose to the highest level during the first quarter of 2017 than at any time in the five-year history of the survey. Sixty-two percent of respondents expressed positive sentiments about the economy, up from 54 percent at the end of 2016 and 48 percent last March.
NAR Chief Economist Lawrence Yun said the geographic dispersal of answers to the question represents an extraordinary reversal from previous surveys. Positive answers rose from 51 percent in the Midwest last quarter to 67 percent and in rural areas by 20 percentage points to 63 percent. A year earlier only 49 percent of Midwesterners and 35 percent of those living in rural areas thought the economy was improving.
“Confidence levels generally rise after a presidential election as the nation hopes for the best.,” Yun said. “Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now. Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home. These positive developments would be especially good news for prospective homebuyers in the more affordable Midwest region…
Mortgage interest rates moved to the highest level since 2014 last week, as the Federal Reserve indicated it will more than likely increase short-term interest rates at its meeting Wednesday.
That lit a fire under homeowners who clearly saw this as a last chance to refinance at the lowest rates.
Total mortgage application volume rose 3.1 percent last week from the previous week. The seasonally adjusted tally from the Mortgage Bankers Association remains 12 percent lower than a year ago, when refinance volume was much more robust.
Refinance volume, however, did move 4 percent higher for the week, increasing to 45.6 percent of total applications. Refinance activity remains 27 percent lower versus a year ago.
“Surprisingly, refinance application volume increased for the week, perhaps a sign that homeowners see rates moving away from them and are moving to lock in now before rates increase further,” said Mike Fratantoni, MBA’s chief economist.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less increased to 4.46 percent, from 4.36 percent, with points decreasing to 0.37 from 0.44, including the origination fee, for 80 percent loan-to-value ratio loans.
Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, rose 2 percent for the week and are 6 percent higher than the same week a year ago. Mortgage rates were lower last year, but consumers are feeling slightly better about the economy today than a year ago and more millennials are aging into their homebuying years.
“February’s job report showed strong job growth and faster wage growth. We expect that the benefits from growing household incomes will continue to outweigh the headwind of slightly higher mortgage rates,” Fratantoni said. “We continue to forecast strong growth in home sales this year.”