This story was originally published on Builder.

Economists from the NAHB, Metrostudy, and the National Association of Realtors (NAR) are in agreement that 2018 will be a good year for the new-home and resale market, despite the ongoing burden of labor and lot shortages and rising material costs. Large price appreciation gains are helping to offset these costs, but they’re also keeping buyers out of the market.

As the economy nears full employment (the unemployment rate has held at a 17-year low of 4.1 percent since October), demand for new and resale housing is far outpacing construction, and resulting price gains are not commensurate with the nominal growth of wages.

According to the NAR, inventory of resale homes nationwide increased slightly in January (after hitting the lowest level seen since 1999 a month prior), but continued a 20-month trend of falling below inventory levels year-over-year. Despite projecting slight relief for househunters in 2018, the NAR specified that inventory will open up primarily for buyers in mid- to high-price segments—the supply of homes in the entry-level price range aren’t expected to increase for at least another year.

Entry-level customers make up a large share of prospective buyers, and with rate hikes imminent, the window during which these buyers feel comfortable purchasing a home could be closed by the time builders are able to provide product. In fact, Metrostudy projects demand will continue to outpace supply until 2023, after demand’s projected peak in 2020. Although nationwide inventory shortages have been a factor for the past three years, the potential impacts of a now long-standing shortage shrouds largely optimistic 2018 projections from industry leaders with a veil of doubt.

Chief economists at Zillow and Redfin both contend that the housing market in 2018 will be shaped by inventory. According to Nela Richardson, Redfin’s chief economist, inventory of starter homes isn’t expected to increase at all in 2018, and household formation isn't likely to change significantly as millennials are further resigned to the almost equally unaffordable rental market.

“We believe the trend of more people living with roommates will accelerate in 2018 due to the lack of affordability,” Richardson says, noting the popularity of app-based services like Nesterly and CoBuy that help pair roommates and support group home-buying. A more local impact of the shortages could come in the form of migration, as Richardson predicts people will leave areas with high state and local taxes in order to afford the kind of home they want for less money.

Despite surpassing baby boomers as the largest living generation, the numbers show that millennials are the most underserved age segment in the U.S. While 2018 could very well be a good year for housing, the market can’t truly be deemed healthy until it becomes more inclusive, industry watchers say.

To read more stories like this, visit Builder.