The housing market is largely being driven by a shortage of readily available housing stock and ... [+] incredibly low-interest rates. Xinhua News Agency/Getty Images The real estate market has been on fire this year with record-low home loan rates and an abrupt wave of relocations enabled by remote work. On the other hand, home costs have actually pressed new limits as purchaser need continues to rise.
We expect sales to grow 7 percent and prices to increase another 5. 7 percent on top of 2020's currently high levels. While we anticipate mortgage rates to tick up gradually, sales and cost development will be moved by still strong demand, a recuperating economy, and still low home loan rates.
While younger Millennial and Gen-Z buyers are expected to play a growing role in the housing market, fast-rising prices will create a bigger barrier to entry for the many first-time buyers in these generations who don't have existing home equity to tap for down payment cost savings. Although supply is anticipated to lag, we do anticipate the declines to slow and potentially visit the end of the year as sellers grow more comfortable with the marketplace environment and brand-new building and construction selects up.
On the whole, the marketplace will remain seller-friendly, but buyers will still have reasonably low home mortgage rates and an ultimately improving selection of houses for sale. With house builder self-confidence near record highs, we expect continued gains for single-family construction, albeit at a lower development rate than in 2019. Some slowing of new house sales growth will take place due to the reality that a growing share of sales has come from homes that have actually not started building and construction.
But supply-side headwinds will continue. Residential building continues to face restricting factors, consisting of higher expenses and longer shipment times for structure products, an ongoing labor skills shortage, and concerns over regulative cost problems. For apartment or condo building, we will see some weak point for multifamily rental development particularly in high-density markets, while remodeling demand needs to remain strong and expand even more.
We're leaving 2020 with a number of dynamics that will more than likely keep this insane real estate market going. There is incredibly low inventory, with less than 500,000 homes for sale, home loan rates are at 50-year lows, and there's no indication yet of distressed sellers from the economic downturn coming out.
Stock and rates should relieve a bit in the second half of the year, and bigger financial headwinds might begin revealing up. Till then, purchasers should be careful and sellers pleased. While 2020 did not surprise with its reasonable share of surprises, 2021 might still have more surprises in store for us.
Housing Market 2021
First, interest rates, which have motivated lots of purchasers in 2020, are anticipated to remain low and will help ameliorate some of the price issues resulting from rapid house cost appreciation seen in 2020. In other words, low mortgage rates continue to provide higher buying power, particularly for novice home read more purchasers.
But also, the earliest Millennials are progressively contributing to the trade-up market. As an outcome, 2021 home sales activity is anticipated to remain strong and outmatch 2020 levels. Third, inventory levels are most likely to see some improvement, partly from sellers who have been on the sidelines, partly from distressed property owners, and partly from more new building and construction.
Asian American homes saw the most significant earnings development of any racial or ethnic group in the United States over the past decade and a half nearly 8% compared to a 2. 3% national average. Education definitely is a significant contributor to this growth with more than 54% of Asian Americans having a bachelor's degree compared to the nationwide average of 32%.
States like North Carolina, Alabama and Texas are seeing a boost in net migration of Asian Americans. Although this is good news entirely, let's not forget that there's an earnings disparity within our community. While a great deal of Asian American homes are experiencing earnings development, we've also been struck hard with the pandemic with small companies closing and tasks lost due to Covid-19.
They are likewise altering real estate choices, for instance, looking for more space. Combined with record-low home mortgage rates and forbearance programs, chances are the real estate market will stay strong, however it is not a foregone conclusion. There is still significant danger to the drawback if financial normalization coming out of the pandemic is mishandled or substantially postponed.