For the housing market, very good things are on the way but may take longer than initially expected.

During the National Association of Homebuilders’ (NAHB) recent webinar, Mark Zandi, chief economist at Moody’s analytics, offered a holistic outlook of the economy then related it to the housing market.

“The broader national economy and the housing market continue to improve. I expect that to continue through 2017 because prospects are good,” he said.

He then gave a handful of reasons for that, starting with the job market.

“Job growth is, by any standard very strong,” he said, noting that the U.S. is adding 2.57 million jobs per year, which is double the pace to reduce unemployment and underemployment.

According to Zandi, the quality of the jobs is also improving.

“Early in the recovery most job growth was low-paying jobs and now the job growth is across the board from low-paying to middle and high-paying jobs,” he explained. “One of the best leading indicators of job growth are job openings and if you look at the openings rate, it has increased quite substantially since the beginning of the year and continues to rise quite quickly.” In fact, job openings are now greater than the number of new hires happening, which is the first time that’s happened since 2000.

Zandi said he expects the U.S. to return to full employment—including people who have dropped out of the job market—before long and that wage growth will be “meaningfully above” the rate of inflation “by this time next year.”

Zandi also said households are in better state financially, mainly by paying down their debt and taking advantage of lower interest rates through refinancing, which has resulted in good credit conditions.

Turning to the housing market specifically, Zandi explained that the housing demand (1,700,000) is currently greater than the housing supply (1,050,000) and that the difference between the two will only widen as more millennials move from living with their parents to renting/owning homes.

“While I’m very confident about where we’re headed, I’m not quite as confident in how quickly we’ll get there,” he said. “There’s a lot of supply-side concerns. Everything from lumber in Canada to not enough capacity to produce toilet and other fixtures to demand-side constraint like student loans and depressed wages [will delay the recovery] but I’m quite confident we will see a ramp up.”

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