While this change reflects improvements in personal finances over the past few years, it is also becoming increasingly clear that retirement in American has fundamentally changed.

When workers of all ages and income brackets are taken into account, data collected by a Gallup poll in April 2013 provides a surprising insight: more workers — 40 percent — said they will continue working by choice than those that said they will continue to work because they will be forced to do so by financial necessity, which was 35 percent. However, because these percentages average data from a varied population, the numbers do not create a view of the retirement prospects of all Americans.

Most notably, the number of workers planning to work past retirement because they must depends significantly on household income. Middle and lower-income workers are much more likely than those earning higher wages to be unable to afford to retire. Of those workers earning less than $30,000 per year, 32 percent said they would continue working by choice, while 43 percent said they would continue working out of necessity. Only 15 percent said they would stop working Comparatively, among workers earning between $30,000 and $74,000, 35 percent expect to continue working by choice and 39 percent expect to continue working because of poor finances. Among workers earning $75,000 or more, 49 percent will work by choice and only 26 percent will work because they have to.

This data confirms other recent retirement findings. Gallup discovered that middle-income and, to an even greater degree, low-income workers were much more likely than upper-income Americans to expect part-time work will be a major source of income in retirement.

Gallup also broke down the numbers by age brackets: 18 to 34 years, 35 to 54 years, and 55 and over. Of those respondents in the youngest age bracket, most said they would stop working by choice. In the middle group, the numbers were fairly balanced, while in the oldest age bracket, most said they would stop working by choice as well.

Still, a growing body of research suggests that retirement — once depicted in halcyon terms — has undergone key changes. American workers should prepare to work longer than previous generations, which could rely on the stability of Social Security, and did not experience the same setbacks in their ability to save as the financial crisis brought.

According to the Employee Benefit Research Institute’s latest survey on retirement confidence, the majority of workers have saved for their golden years, but the piggybank is quite slim. Excluding the value of a primary home and any defined benefit plans, 57 percent of households say they have less than $25,000 in savings and investments, while twenty-eight percent say they have less than $1,000. Furthermore, the Center for Retirement Research at Boston College has warned that 53 percent of American households are at risk of not having saved enough to maintain their living standards in retirement.

“’Retirement’ once connoted a lifestyle free from the demands of work, but also reliance on personal savings and Social Security,” as Gallup noted in the “bottom line” portion of its April survey results. Now that vision is changing, and will continue to do so if Americans continue to work well beyond retirement age as they expect to do. But, according to Gallup, that may have social and health benefits for Americans, if “staying in the workforce keeps seniors more physically and mentally active than they would be otherwise.” It would clearly help them financially, especially as the alternative will likely be dependence on inadequate savings and an uncertain Social Security system.

Follow Meghan on Twitter @MFoley_WSCS

Don’t Miss: 8 Worst States for the Unemployed.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 10.5 percentage points to 49.0%. This is the highest level of optimism since January 24, 2013 (52.3%). This is also just the second time in the past 10 weeks that bullish sentiment is above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, fell 2.7 percentage points to 29.5%. This is the first time in five weeks that neutral sentiment is below its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 7.8 percentage points to 21.6%. This is the lowest level of pessimism recorded by our survey since February 9, 2012 (20.2%). The historical average is 30.5%.

Both bullish and bearish sentiment are near the outer edges of what we consider to be normal readings. Though optimism is high and bearish sentiment is low, neither are at unusual levels…

One standard deviation above average for bullish sentiment is 49.3%. One standard deviation below average for bearish sentiment is 20.5%.

Since bearish sentiment peaked at 54.5% on April 11, 2013 (nearly a three-year high), it has fallen by a cumulative 32.9 percentage points. Over the same period of time, bullish sentiment has rebounded by a cumulative 29.7 percentage points (from a low of 19.3%).

The market’s resilience and the ongoing record highs being set by the Dow Jones industrial average and the S&P 500 index are keeping AAII members optimistic about the short-term outlook for stock prices. Also helping sentiment were the first quarter’s better-than-expected earnings, signs of continued economic growth and a lack of new bad news. Some investors remain cautious, however, because of current valuations, the actual pace of economic growth and a lack of progress on key issues by the White House and Congress.

This week’s special question asked AAII members for their opinion of the current dividend yields. Nearly one in four respondents (23%) described current yields as being low or too low. Another 16% described dividend yields as being higher than bond yields. A similar percentage thought dividends could be or should be raised. Many in this third group expressed a desire for companies to divert money from share buybacks to dividend increases. More than one in five respondents described dividends as either being good or satisfactory.

Here is a sampling of the responses:

· “I would rather see companies pay shareholders with increased dividends than share buybacks.”

· “Getting leaner as we speak. Searching for value more is difficult every day.”

· “Share price increases have pushed dividend yields too low.”

· “Yields could be higher. More cash rich companies should declare dividends than hoarding cash beyond reasonably foreseeable requirements.”

· “Definitely beats the current yield on bonds.”

· “Reasonable considering the other options for income.”

This week’s AAII Sentiment Survey results:

· Bullish: 49.0%, up 10.5 percentage points

· Neutral: 29.5%, down 2.7 percentage points

· Bearish: 21.6%, down 7.8 percentage points

Historical averages:

· Bullish: 39.0%

· Neutral: 30.5%

· Bearish: 30.5%

Charles Rotblut is the author of the new book Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio. The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at http://www.aaii.com/sentimentsurvey

Don’t Miss: Here’s Why Stocks Sparked a Turnaround.

The three criteria considered for ranking were income replacement, or average unemployment benefits (as of 4Q 2012) as a percentage of average state income per capita; unemployment rate (as of March 2013); and wealth disparity, the ratio of households with incomes of at least $200,000 to those with incomes of less than $10,000 (as of 2011 Census ACS). Each state was ranked on the three criteria and the ranks were averaged.

8. Alaska

We begin with Alaska. Though it is the 8th worst state for the unemployed, it bears a 6.2 percent unemployment rate that is more than a full percentage point below the national average of 7.5. What are Alaska’s other claims to fame? While it is the 15th worst state for minimum-wage workers, it also boasts the #1 spot for the most female senior workers. Careful inspection of where Alaska falls in the three criteria shows that its income replacement rank is what largely accounts for its status as #8 worst place to live. It bears a relatively low unemployment rate and its average income per capita isn’t significantly lower than the other seven. However, its income rank of #3 is what influences its bad reputation.

7. New Jersey

New Jersey holds down the stop at #7 and is also one of the five states on our list of havens for the unemployed. It does not tax the insurance benefits of its 414,973 unemployed persons, but unlike Alaska, the Garden State has a high unemployment rate, sitting at 9.0. New Jersey is also the second worst state for minimum-wage workers. Additionally, it is the sixth highest state with the most million-dollar tax filers, elucidating the state’s wealth disparity, the factor that helped it earn its #7 spot.

6. Illinois

Next on our list is Illinois, the state that also suffers from the second highest unemployment rate in the U.S. at 9.5, two full percentage points above the national average. While right below New Jersey, it is the 5th state with the most million-dollar tax filers. Unemployment insurance covers 36.4 percent of lost income.

5. Delaware

Delaware is next in line, holding the #5 spot. Its unemployment rate of 7.3 is only slightly lower than the national average and it ranks #7 on income replacement. The state’s average weekly unemployment benefits of $243 are also noticeably lower than its neighbors on the list. The two states that flank Delaware on the list, Illinois and New York, have weekly benefits much higher at $315 and $305, respectively.

4. New York

Speaking of New York, it’s next on the list at #4. Like its fellow neighbors on the list, it has an unemployment rate sufficiently above the national average, at 8.2. It is also ranked #8 on income replacement, right behind the aforementioned Delaware. The state that is home to the city that never sleeps is the second highest with the most million dollar tax filers. It also holds the #2 spot among states that earn the most tax revenue from alcohol, tobacco, and betting. It is the third worst state for minimum-wage workers.

3. California

California, ranked third, is the only state that falls into all three of our lists in that it suffers one of the highest unemployment rates, serves as a tax haven for those unemployed, but still remains one of the top worst places to be it. What is it about the Golden State that warrants it all these titles? Barring Nevada, California bears the highest employment rate of any U.S. state., but it is also the state with the greatest growth in jobs for techies, most showbiz jobs, and most million-dollar take filers. Thus, the wealth disparity and the high unemployment rate help earn it its #3 status.

2. Connecticut

Connecticut comes in second for worst places to be unemployed, with an 8.0 unemployment rate and 147,031 unemployed persons as of April. Not only is it ranked #6 on income replacement, but excluding the District of Columbia, it has the highest average income per capita. It also is the fifth worst place for minimum wage workers.

1. District of Columbia

Not only does Washington, D.C., rank #1 on income replacement, it also has the highest average income per capita, by far. It also blows its neighbors on the list out of the water. While each of the other seven states differ in their average rank of all three criteria by 1 or 1.5 points, District of Columbia differs from the #2 spot, Connecticut, by 2.3. Its average rank on the three criteria is 5.7, while Connecticut’s is 8.0. Alaska, the #8 state on our list, has a rank of 15.7, a full 10 points higher than D.C. Now, what else does the state hold the #1 spot for? Aside from the worst place to be unemployed, it has the greatest gain in associate-degree pay, largest wage increases, most male senior workers, highest pay for tech jobs, and is the worst place for minimum-wage workers. Moral of the story: if you’re unemployed, stay away from D.C.

Don’t Miss: How Long Can the Economy Support Rising Home Prices?

While these states all had unemployment levels close to the national average at the end of 2006, the most recent U.S. Bureau of Labor Statistics report shows that these four states are continuing to feel the devastation of the recession more so than others. From the West Coast, down to the South, up to the Midwest, and then back to the West, the four states with the highest unemployment rates show that slow recession recovery does not discriminate.

1. California

With a current unemployment rate of 9.0 percent, 1.5 percentage points higher than the national average, the Golden State bears the fourth highest unemployment rate in the U.S. Fortunately, California protects its 1,748,519 unemployed persons by exempting their unemployment insurance benefits from being taxed. California continues to stand as the most populous state in America. However, should these figures continue to stand, more people may be finding themselves seeking residence elsewhere. Though its direct neighbors are not faring much better, many states east of the state, including Utah, Idaho, and Wyoming boast unemployment rates almost half that of California.

2. Mississippi

Down South, Mississippi suffers the third highest unemployment rate at 9.1 percent. Though the rate continues to inch down, it still stands significantly higher than the national average.

In March, the state saw a decrease in unemployment after two months of increases. Mississippi continues to send mixed signals, as it demonstrates positive economic indicators and payroll rises, but still continues to face precarious jobless rates. It remains nearly 4 percent, or 45,000 jobs, short of its all-time peak.

3. Illinois

Up in the Midwest, Illinois also shows sign of struggle as it bears a 9.3 percent unemployment rate. While jobless rates have recently dropped in other states, the Prairie State is witnessing the opposite, reflecting the unevenness of the states’ recession recovery. Similarly, Delaware, Indiana, Wisconsin, Mississippi, and New Hampshire have also seen a rise in their jobless rate, rather than the expected fall. While Illinois suffers the second highest unemployment rate in the U.S., its direct Northwest neighbor, Iowa, claims the fifth lowest.

4. Nevada

The state suffers the highest unemployment rate of 9.6 percent, a two full percentage points higher than the national average. However, it’s not all bad news for Nevada. This gamblers’ paradise also registered the largest rate drop in unemployment of all the states over the year. While first-time claims for jobless benefits in Nevada rose in April, the number of claims is smaller than the ones filed last April.

Don’t Miss: Are Rising Interest Rates Hurting the Housing Market?

ECB Executive Board member Peter Praet reaffirmed the need for the euro zone to avoid deflation and increase lending en route to a healthy recovery, two factors which show stagnant growth currently. From January 2013 to April, inflation in the EU has fallen from 2 percent to 1.2 percent, marking a period of decline not seen since 2008.

While dismissing immediate concerns of a deflationary crisis, Mr. Praet did say, “We have an objective: price stability,” stating the ECB would look to whatever devices necessary to maintain that goal.

Praet’s comments follow testimony from U.S. Federal Reserve Chairman Ben Bernanke, who has indicated his central bank may now ease up on its efforts to prop up the U.S. economy. Mr. Bernanke admitted the bank will slow down the rate of its $85 billion dollar bond buyback program, otherwise known as ‘quantitative easing,’ if the prospects for economic growth continue to look up. GDP growth grew at 2.5 percent in the first quarter of 2013 in the United States, despite the fiscal squeeze from Washington, with personal expenditures among consumers rising 3.2 percent.

As recession continues to plague Europe, though, lending continues to be weak, and the central bank is looking for ways to generate activity in the sector, reaffirming its commitment to provide unlimited funds to banks for another year. However, despite having access to unlimited capital from the central bank to finance lending projects, loans in the range of .25 million to 1 million euros have continued to decline since 2010.

Source: http://ec.europa.eu

Interest rates also remain low, with the refinancing rate at 0.5 percent in hopes that such rates will promote risk-taking and expansion. The ECB is now also looking at allowing banks to borrow increased amounts of money against a singular amount of collateral, a move which is designed to allow banks to get more cash.

Yet policy-making and domestic economic pictures continue to hamper the best efforts of the ECB, specifically in France, where record unemployment has taken hold, and President Francois Hollande’s administration defends itself from being anti-business.

France is not alone, though, as Spain suffers all the woes which define the current European Recession.

The Spanish economy saw a contraction of 0.5 percent in the first quarter of 2013, as consumer spending has slowed, housing prices are on the decline, and unemployment continues to rise. Analysts are now postponing the prospects of stability in the Spanish economy until 2014, as S&P recently showed that housing prices in some areas have fallen by as much as 40 percent. Many families are unable to sell their homes while maintaining mortgages now worth more than the home’s value.

Speaking on the prospects of the ECB relaxing its actions, Austrian central banker Ewald Nowotny said, “In my view this is not yet the case at the moment (to do so).”

Don’t Miss: A Hot Summer Promises to Send Natural Gas Prices Soaring.

The Energy Information Administration reported Thursday that natural gas stockpiles rose 89 billion cubic feet to a total of 2.053 trillion cubic feet, slightly below analysts’ expectations for a 92-billion cubic feet increase. Supplies were 24.9 percent below year-earlier inventories, compared with 26.1 percent in the previous week.

But, as Prestige Economics president Jason Schenker told Bloomberg, this “injection is light but it’s not a game-changer.” There are “already upward-price-pressure dynamics in the market, given the deficit of inventories in place and the recent LNG announcement,” he added.

On May 17, the federal government conditionally approved the Freeport LNG liquefied natural gas export project in Texas, sending gas futures for June delivery up 3.5 cents to $4.09 per million British thermal units, the highest settlement price since May 1. The Freeport project was the second to receive approval from the Energy Department to export up to 1.4 billion cubic feet per day to countries that do not have free-trade agreements with the United States. The Freeport development — which is partly owned by ConocoPhillips (NYSE:COP), Dow Chemical (NYSE:DOW), and Osaka Gas — must still win approval from the Federal Energy Regulatory Commission. Cheniere Energy’s (NYSEMKT:LNG) Sabine Pass terminal in Louisiana is the only project that has full government approval to export LNG.

Just after the natural gas report was released Thursday morning, natural gas increased 3.9 cents, or 0.9 percent, to $4.225 per million British thermal units on the New York Mercantile Exchange. Prices have climbed 26 percent so far this year and 7.5 percent since May 16, the day before the Energy Department approved the Freeport export project.

Thanks to the boom in gas production from shale formations, the EIA has estimated that U.S.-marketed production in 2013 will set a record for the sixth straight year, increasing 1 percent to 69.9 billion cubic feet per day, according to the May 7 Short-Term Energy Outlook.

Gas supplies have been particularly affected by recent weather. “We really haven’t had a shoulder season,” Price Futures Group market analyst Phil Flynn told Bloomberg. “We’ve had either cold weather or very warm weather and demand expectations are continuing to rise.” Above-normal temperatures will spread through most of the lower 48 states from June 2 through June 6, according to the Commodity Weather Group. The high in New York on June 3 could reach 88 degrees Fahrenheit, which is 12 degrees higher than the usual reading. As a result, gas consumption will spike this summer, as high temperatures prompt increased air conditioning use and higher prices.

Follow Meghan on Twitter @MFoley_WSCS

Don’t Miss: How to Retire: All At Once, Or a Little At a Time?

Warren Buffett once said, “In business, I look for economic castles protected by unbreachable moats.” The castle is a metaphor for a company, and the moat represents a strong competitive advantage. Naturally, a wider moat offers more protection in the long-term. The Oracle of Omaha has provided a great deal of wisdom over the years, but this piece of insight is more evident than ever.

Corporate America is a battlefield with an endless supply of warriors trying to breach moats in pursuit of profits. In a 2007 letter to shareholders, Buffett explains, “A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.”

A powerful worldwide brand is one of the most recognizable economic moats. While it is considered to be an intangible asset, it is measured in dollar terms by BrandZ, the world’s largest brand equity database firm.

Calculating variables such as branded earnings, financial value, and brand contribution, the most valuable 100 brands around the globe grew their worth 7 percent to $2.6 trillion last year, with all but two of the 13 categories in the ranking posting year-over-year growth.

Interestingly, the stock performance of the most valuable brands easily outperformed the broad market. To little surprise, Buffett’s Berkshire Hathaway (NYSE:BRKA) owns several names on the list.

Heeding Buffett’s lesson on economic moats and powerful brands has been very profitable in recent years. Between April 2006 and April 2013, a portfolio filled with BrandZ’s top 100 brands has crushed the S&P 500. As the chart below shows, BrandZ’s portfolio has surged 58 percent, while the S&P 500 (NYSEARCA:SPY) has gained 23 percent.

Of Buffett’s ten largest equity holdings, eight appear on the top 100 valuable brands list. At the end of the first quarter, Berkshire held large stakes in U.S. Bank (NYSE:USB), Wal-Mart (NYSE:WMT), American Express (NYSE:AXP), International Business Machines (NYSE:IBM), Coca-Cola (NYSE:KO), and Wells Fargo (NYSE:WFC). Procter & Gamble (NYSE:PG) — Buffett’s fifth largest holding — made the most valuable brands list twice with Gillette and Pampers.

Buffett has not been shy about his bullish stance on America. In a recent interview with CNBC, he said, “In terms of the economy, the luckiest person born in the history of the world is the baby being born in the United States.” Considering this, it is very suiting that almost half of the top 100 brands are based in North America, and account for two-thirds of the top 100’s $2.6 trillion brand value.

Don’t Miss: What is Warren Buffett Buying and Selling?

Follow Eric on Twitter (@Mr_Eric_WSCS)

One major change could be the replacement of the iPhone’s physical home button. This button is one of the most frequently repaired parts on the smartphone, and an unconfirmed report from TechNews reveals that Apple may be considering replacing it with a sapphire crystal capacitive touch button. Besides eliminating the problematic moving part, the introduction of a new touch button could also allow designers to further expand the possibilities of Apple’s minimalist design philosophy. The sapphire crystal capacitive touch button is also rumored to function as a fingerprint sensor, which leads us to our next rumor.

Will a fingerprint sensor  be the next revolutionary technology feature of the new iPhone? Following Apple’s acquisition last summer of AuthenTec, a mobile and network security company, some fans and analysts are convinced that it will use AuthenTec’s fingerprint sensor technology in the iPhone 5S — either as a way to unlock the phone or a method of processing payments. What Siri was to the iPhone 4s, the fingerprint sensor could be to the iPhone 5s, and it would be located below the phone’s home button, or perhaps in place of it.

The next rumor involves the screen size of the iPhone 5s. While tech companies used to compete over who could produce the smallest mobile device, it is evident now that that trend has changed. The popularity of large-screened devices is growing, and following Samsung’s introduction of the Galaxy Note into the market, there is speculation that Apple will increase the screen size of its upcoming iPhone models. However, Brian White, an analyst at Topeka Capital Markets, also predicts that Apple will release its next generation of iPhones with at least two different screen sizes, if not three.

Do you want Apple’s next smartphone to be even smarter? You might be in luck. A recent patent application from Apple has rumors circulating that the company might introduce a new system that allows the iPhone 5S to control and even protect itself. The patent described a motor that could be put into the device to control its orientation as it falls, allowing it to avoid landing on sensitive areas. It also described gas containers that could use thrust to control the fall or slow it down. There are some more technologies described in the patent literature that would provide a means to protect the expensive device. Take that, Samsung.

What else could the iPhone 5s possibly have? Leaked pictures have suggested that it might be getting a major camera upgrade. Interesting pictures of a new iPhone motherboard signify that the device’s camera may experience significant reworking. Examination of the motherboard  reveals what appears to be a structural change to the internal circuit board, where the camera and flash components are normally housed. As always, this could be another product in the works and completely unrelated to the iPhone 5s, but where’s the fun in that?

Analyst Ming-chi Kuo of KGI Securities enlightened us early in March that the iPhone 5S will probably feature a technical spec upgrade, such as a faster central processing unit. Other reports in recent months have suggested that the next-generation iPhone could also incorporate Near Field Communication technology, even though Apple was initially hesitant about the use of the technology showcased at the World Mobile Congress this year. The NFC technology allows for communication between devices that are located in close proximity, which could be implemented in mobile payments.

Last but not least: would you like an app with that? Apple is also rumored to be coming out with a new “killer app” that it could debut at the Worldwide Developers Conference this June. So what does this “killer app” entail? Well, therein lies the problem. Some speculate that it could be a mobile wallet, while others lean towards a radio service. Though Apple’s Passbook app almost allows the phone to function like a credit card, the next iPhone would need to embrace NFC technology for it to function as a true mobile wallet. Apple could also be trying to launch a streaming radio service to compete with Spotify, Rdio, Rhapsody, and Amazon (NASDAQ:AMZN), which is all well and good, but is that the “killer app” they speak of? Is iRadio what they consider killer? We shall see.

Don’t Miss: This Is Why Your iPhone 5 Repair Costs So Much.

Among this group — loosely defined as the generation of people currently between the ages of 18 and 34 — student debt is the primary concern. The Consumer Financial Protection Bureau found that at the end of 2012, total student debt outstanding was more than $1 trillion. This is more than total outstanding credit card debt, and is increasing at a faster and faster rate. The fraction of students with debt has increased dramatically over the past eight years. The borrowing rate among 25-year-old students in the fourth quarter of 2004 was 27 percent, and increased 16 percentage points to 43 percent by the fourth quarter of 2012.

More than half (64 percent) of millennials in the survey reported that they financed school through student loans, a tremendous increase from 29 percent of boomers. Just under half (42 percent) said that their current debt load is “overwhelming,” more than twice the rate of boomers. Summing up the situation appropriately, when asked what they would do if they had $10,000 in hand, 49 percent said the first thing they would do is pay off debt.

What all this points to is that millennials are too busy paying off debt to save for retirement. Only 49 percent have begun to save for retirement. Of that, 47 percent are saving between 1 and 5 percent.

“I am glad to see about half already saving for retirement,” commented Karen Wimbish, director of Retail Retirement at Wells Fargo. “But we’re also seeing that half of this generation has not started to save and is putting it off until the 30s. I can’t stress enough how important it is for this generation to start saving now – the benefits of starting young can’t be recreated later.”

Earlier in May, Nobel Laureate Joseph Stiglitz joined the chorus of people warning against the student debt crisis and the systemic negative impact it will have on people’s lives and the economy. Stiglitz points out that average tuition and room and board at a four-year college is just shy of $22,000 per year. This is more than double the average price of under $9,000 in 1980-1981.

“Like much else, the problem of student debt worsened during the Great Recession: tuition costs at public universities increased by 27 percent in the past five years — partly because of cutbacks — while median income shrank,” he wrote.

Don’t Miss: Bernanke’s Testimony: Is Congress Failing the Economic Recovery?

According to the Mortgage Bankers Association’s latest report for the week ending May 17, loan application volume dropped 9.8 percent on a seasonally adjusted basis from one week earlier. This comes after a 7.3 percent decrease in the prior week. These figures include both refinancing and home purchase demand, and cover over 75 percent of all domestic retail residential mortgage applications.

The industry group’s Refinance Index plunged 12 percent. Earlier this month, the Refinance Index hit its highest level since December 2012. Meanwhile, the Purchase Index decreased 3 percent after recently reaching its highest level in about three years.

Overall, the refinance share of mortgage activity decreased to 74 percent of total applications, compared to 76 percent in previous weeks. The refinance share declined for ten straight weeks earlier this year, but hit its highest percentage in about three months earlier in May.

The average interest rate for a 30-year fixed-rate mortgage came in at 3.78 percent, up from 3.67 percent in the prior week. Mortgage rates are quickly approaching new highs. For example, the week ending March 15 posted the highest contract rate since August 2012 at 3.82 percent. The most recent average rate for a 15-year fixed-rate mortgage also increased from 2.88 percent to 2.96 percent.

“Mortgage rates increased to their highest level since March last week, leading to the largest single week drop in refinance applications this year,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “The refinance index has fallen almost 19 percent over the past two weeks and is back to its lowest level since late March. Purchase activity declined over the week but is still running about 10 percent above last year’s pace at this time.”

In morning trading, shares of home builders such as Toll Brothers (NYSE:TOL) surged more than 6 percent, while PulteGroup (NYSE:PHM) and Lennar (NYSE:LEN) both jumped nearly 2 percent. Despite reporting weaker-than-expected quarterly financial results, shares of Lowe’s (NYSE:L) gained 2 percent.

Don’t Miss: Is the Housing Bubble Already Making a Comeback?

Follow Eric on Twitter (@Mr_Eric_WSCS)