Affordable mortgage money is the fuel that is going to pull the real estate market out of the woods. And there are some encouraging signs that may be happening right now.

Take a look at interest rates: They plunged last week by nearly a quarter of a point on 30-year fixed-rate money -- down to 5.74 percent from 5.98 percent, according to the Mortgage Bankers Association of America.

Then there was the big jump in new loan applications from people looking to buy houses. They were up by almost 11 percent for conventional conforming loans -- those are the types funded by Fannie Mae and Freddie Mac -- but up by an amazing 21.1 percent for government-backed mortgages, primarily FHA.

You can be the world's grouchiest, grimmest housing market bear ... . But you can't deny that something is stirring out there in the market.

It may not be the end of the down cycle as a whole, but it's certainly pointing to a more active spring season than the naysayers on Wall Street have projected.

There were some other positive signs that popped up last week as well: The total inventory of unsold houses dropped by 3 percent. New homes for sale dropped 2.1 percent. Those inventory numbers are critically important because they tend to be heavy drags on local markets -- pushing prices down and making buyers pickier.

Even new home sales did better than most analysts had predicted: They dropped by 1.8 percent last month, which may not sound good, but that decline was measured off upward revisions of the two prior months' sales.

In other words, there were more home sales going on than reported earlier in January and December, and overall sales are stabilizing.

Now, in fairness, not everything is cheery out there. Consumers are still rattled by the economy and the upheavals they see on Wall Street. The latest consumer confidence index from the Conference Board nosedived to levels usually associated with recessions.

People are worried. They're spending less, and that is rippling throughout the economy. Continuing price declines in the once-booming housing bubble markets are also keeping consumers on the sidelines. Many of them don't want to commit to a purchase until they are sure prices won't go much lower.

So all in all: There are unmistakable glimpses of light out there. You can't -- and shouldn't -- ignore them.

But we've still got a way to go before we can officially pronounce the correction cycle done, down and out.

Published: April 3, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.