With the start of New Year just behind us, it’s a good time to take stock of the landscape for real estate in 2019 and beyond. As MBA’s President and CEO, I am often asked for my views on the outlook for the housing sector. There’s no doubt that a combination of low inventory, a significant drop in refinance activity, and uncertainty caused by trade wars, government shutdowns, and a volatile stock market have given many pause. Overall, however, I agree with MBA’s most recent forecast commentary that 2019 will be a good year for borrowers and lenders alike.

Why am I optimistic? First from a macroeconomic perspective, U.S. GDP grew by just over 3 percent last year, the largest increase since before the financial crisis. MBA’s forecast calls for that growth to continue in 2019 and 2020 at a more moderate pace. That underlying strength of the economy is good news for the housing sector.

For potential borrowers, overall wage growth was strong in 2018, and we expect that to continue in 2019. Not only did wages increase, but job creation was also strong, averaging over 200,000 jobs per month in 2018. Our forecast expects this trend to continue this year, albeit at a slightly slower pace. We expect to see the unemployment rate stay near historic lows even as overall growth slows.

The slowing increase in home prices is another reason for optimism. A lack of supply, especially for starter homes that are the gateway to homeownership, caused unsustainable increases in home prices in markets across the country in recent years. While housing inventory is still low, the lower rate of price increases will make homeownership more achievable, especially for borrowers with smaller loan balances.

Despite all these positive economic indicators for housing, the uncertainty I mentioned is having an economic impact. But here, too, there are reasons for cautious optimism. In particular, the Fed is now likely to raise interest rates at a slower pace than we had anticipated. Although mortgage rates can move up or down independently of the Fed’s actions, it is unlikely that mortgage rates will rise steadily as they did in 2018. We’ve even seen a pickup in refinance activity recently in response to lower rates.

One final reason — and maybe the most important reason — the outlook for housing is positive is simple demographics and the large cohort of millennials entering their prime home-buying years. Much has been written about student loan debt and the impact of the financial crisis that hit just as some millennials entered the labor force, but all indications are that millennials, the largest generation yet, want to own homes just as much as earlier generations; their aspirations simply have been delayed.

While our industry will face challenges and headwinds, there are clear trends that indicate the outlook for the housing sector over the next few years is bright.