Rising home prices aren’t stopping people from buying homes. The National Association of Realtors (NAR) said Wednesday US existing home sales jumped 3.3% in January — the highest level since a decade ago, when sales slowed down following the subprime mortgage crisis.

But a lack of inventory to meet pent-up demand for new homes could stand in the way of a fully healthy housing market.

“The biggest hurdle is the fact that there aren’t enough homes,” National Association of Realtors’ chief economist Lawrence Yun told Yahoo Finance. “Hopefully as we proceed through 2017, more inventory can show up, homebuilders can build more homes and there would be healthier development.”

The tight supply in home construction results from a shortage in able construction workers. And, given President Donald Trump’s aggressive ambitions to crack down on undocumented immigrants, homebuilders may have an even tougher time finding workers in the future, according to Yun.

“It’s widely known but less discussed that there are many undocumented workers at construction sites. And with the border being much tighter, it may lead to a greater construction worker shortage unless America can crank out people with the skills in construction, plumbing, lumber framing, and welding,” he said.

The US has approximately 200,000 unfilled construction jobs, which represents an 81% increase over the last two years, according to estimates from the National Association of Homebuilders.

Homebuilders like Lennar (LEN) and Toll Brothers (TOL) have cited a shortage in construction workers as a major reason they’ve had to slow down home construction.

Whether through vocational schools or intensive training programs, the US needs to produce more workers who can start building homes. “Homebuilders keep delaying as to when they can dig the ground,” Yun said. “They’re actively looking for workers, but there just aren’t enough.”

A “resilient” consumer

Despite the shortage of construction workers, Yun was surprised by the strength of the homebuying market, given that home prices have been rising much faster than Americans’ incomes.

“I would have thought that affordability problems would lead to a decline in home sales,” said Yun.

But the ravenous demand for homes, particularly among groups like single women, has triumphed over any concerns surrounding sky-high home prices and revealed the remarkable resilience of the consumer, said Yun.

Crediting continued job creation, a boost in consumer confidence and business confidence, Yun said that people are eager to buy homes.

Additionally, rising home sales have generated a “spillover effect” into areas like appliances, furnishings and lawn services, according to Chris Rupkey, a chief financial economist at Bank of Tokyo-Mitsubishi UFJ. Home Depot (HD) reported a blowout quarter on Tuesday, showing that US consumers are opening their wallets for home-related items.

Other headwinds ahead

Despite an overall healthy housing market, affordability and rising 30-year fixed mortgage rates are still concerns, though Yun notes that people are staying within their budget when it comes to purchasing a home.

Thirty-year fixed mortgage rates have steadied after rising in recent months, but the average rate still remains above 4%. And Yun said there’s potential for it to climb higher.





“Exceptionally low mortgage rates of 2016 are definitely over and an ultra loose monetary policy environment is over. So consumers should anticipate that mortgage rate will be higher. It appears to be stable at the moment but could inch higher closer to 5% by year end,” he said.

But, as long as there’s job creation and economic expansion, people can absorb rising mortgage rates. Still, Yun would urge homebuyers to stay within their means — if they’re lucky enough to actually find a home on the market.

Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.

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