Economists got together during the International Builders' Showcase to discuss the housing market for 2017. Overall, things looked positive. A growing economy, solid employment gains, and rising household formations will gradually help to grow single-family production on a gradual, upward trajectory.

“While positive developments on the demand side will support solid growth in the single-family housing sector in 2017, builders in many markets continue to face supply-side constraints led by the three ‘Ls’ – lots, labor and lending,” said NAHB Chief Economist Robert Dietz. He added that the industry needs more workers and more land.

Those are the challenges, but they are offset by the continued economic growth, ongoing job creation, rising wages, and favorable demographics. Millennials, especially, are driving the town home market right now, entering the market as first-time home buyers.

The economists also pointed to the fact that the incoming administration is expected to cut regulatory costs for builders. Right now, regulatory costs make up about 25% of the price of building a new home, according to Dietz.

Overall expectations are that growth in the housing market will happen at a manageable pace, with a good balance between supply and demand.