US applications for mortgages to buy homes rose 5.5 per cent last week, the first increase since early August, a trade group said today, as consumers rushed to beat rising mortgage rates.
"People sitting on the sidelines have decided to jump in before rates go higher," said Mr Sung Won Sohn, chief economist at Wells Fargo Banks, yesterday.
Higher rates still cut into refinancing demand, which fell to its lowest level in over a year, the Mortgage Bankers Association of America said today. Applications to refinance home loans have fallen by more than 80 percent since peaking in late May. But the housing sector by most other measures is still going strong.
Existing home sales in July reached a record high. Builders broke ground on new homes in July at their fastest pace since 1986, and remain optimistic that sales in the next six months will be strong.
The continued strength is good news, because for at least two years the housing sector has been a crucial pillar for the economy as other areas have sagged.
Some economists reckon that housing, including mortgage refinancing and furniture purchases, was responsible for about half of the economic growth seen in the last 12 months.