Mortgage credit availability is the highest ever recorded for the spring market. Fixed rate for home loans are near 4% and wages are up.

Hmmmm. What can that mean for the spring selling season? Unless Americans don’t want to own houses anymore – and that hasn’t happened yet – it means this month’s data should look pretty good.

But until we see hard numbers showing this month’s home sales, and while we’re awash in housing data reflecting the stagnant first quarter, let’s focus on leading indicators that hint at what’s happening in the spring housing market.

First, the purchase index from the Mortgage Bankers Association, which measures applications for mortgages to buy homes, increased 5% during the first week of May compared with the previous week, and was 5% higher than the same week one year ago.

But, those are applications, right? How likely will they turn into home sales? MBA’s mortgage credit availability index for April was the highest reading for that month in the eight-year index. And, it was near the record high seen in mid-2018. A high reading means it’s easier to get home loans and a low reading indicates a credit crunch.

At the end of March, the U.S. average rate for a 30-year fixed mortgage had the largest one-week decline in more than 10 years, dropping to 4.06%, according to Freddie Mac. Since then, it has bounced around in a narrow band, and this week averaged 4.1%. That's almost half a percentage point lower than it was a year ago, according to Freddie Mac data.

Sales of new home, which are recorded when a contract is signed, rose 4.5% in March, according to the Commerce Department. Pending home sales, reflecting existing homes with newly signed contracts, rose 3.8% in March, according to the National Association of Realtors. 

“There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years,” Lawrence Yun, chief economist of NAR, said in the report.

The next report on new home sales will be released on May 23, and data on pending sales of existing homes will be released on May 30. Until then, track the mortgage applications index – specifically “purchase apps” – MBA issues every Wednesday to monitor the temperature of the spring market.

But, you can’t get a mortgage without enough income, and there are also positive indicators on that. Wage growth has picked up steam in recent months, after years of stagnation. Federal Reserve Governor Lael Brainard cited the positive news about wages in a speech on Friday in Washington.

“Employment rates of adults in their prime working years have been rising steadily during the expansion and recently reached their pre-recession peak,” Brainard said. “Importantly, wage growth has begun to pick up after years of slow gains.”