During 2017, agents, brokers and their clients all learned to expect the unexpected, even in real estate. Driven by record low inventory, little about the housing market went as forecast last year.

Skylar Olsen, senior economist at home search site Zillow, told Forbes the belief last year was that interest rates would rise, construction would pick up and price growth would moderate.

“We thought there would be some things to take the pressure off. That did not happen at any impactful level.”

Instead the market got hotter: inventory tightened, prices rose, mortgage rates barely budged and, though new home construction picked up at the end of the year, it was not at the starter price points where new inventory is needed most.

Observes Javier Vivas, director of economic research for REALTOR.com, said there were a few surprises.

“We saw the economic growth and the economic momentum function as an override for a lot of external forces.”

A Forbes report noted that there are few clear signs of supply relief and the impact of the new tax law still being digested, reading the housing tea leaves is particularly challenging in 2018, but experts offered six key points.

First, the sales pace will slow early, but not for long. Several provisions in the tax bill signed into law by President Trump last month will directly impact housing. These include changes to the mortgage interest deduction and to property tax deductions. Other changes will impact how much money people have, requiring decisions on how to spend it. Experts anticipate households will take some time to do the math on how the tax plan impacts them and the value of their home before making any big moves.

Second, inventory will remain an issue. A trend in 2017, it will continue in 2018. Looking to 2018, the general consensus is that inventory will pick up slightly. The biggest reason for this modest optimism is that the current situation is unsustainable. Prices cannot rise faster than wages forever. Plus, life events will eventually force reluctant sellers off the sidelines. Home search site Trulia found that 31 percernt of Americans believe 2018 will be a better year than 2017 to sell a home, far more than the 14 percent who this it will be worse.

No. 3, price growth is expected to slow, but not stop. National home prices have climbed for 23 consecutive months. From January through October 2017, the Case-Shiller U.S. National Home Price Index increased 5.92 percent, on track for the biggest gains since 2013 when the market was finally recovering from the bust. Experts say prices will continue their march higher in 2018, but the rate of increases will slow.

A fourth prediction is the rent vs. buy equation could move toward renting in some high-priced markets. The new tax law is making it more expensive to own a home in high tax and high price places. For some people the changes, combined with rising prices, may mean renting makes more financial sense than buying. On top of that, high rents and student debt loads have also made it difficult for young households to save up a down payment even if they can afford the monthly mortgage.

The fifth prediction is mortgage rates, expected to say around 4 percent. In December the Federal Reserve bumped short term interest rates 25 basis points to between 1.25 percent and 1.50 percent. Historically, movement from the Fed has had a corresponding effect on mortgage rates, but three hikes in 2017 and two in 2016 only moved the cost of a home loan slightly higher. This has led to doubt on just how much of a difference the three hikes Fed policy makers have projected for 2018 will have on housing.

And the No. 6 prediction, Millennial demand for housing will continue to climb. This demographic picked up in 2017. The generation of adults born after 1980 were slow to enter the housing market, but as a growing share of them get married and have kids they are buying homes at rates equal to their parents. In fact, single Millennials are more likely to own a home than prior generations of singles.

Claim Your FREE Real Estate Treasure Map!