Housing market potential is positioned for growth in 2021, according to First American's potential home sales model. First American, reported in its recent study that potential existing-home sales increased to a 6.17 million seasonally adjusted annualized rate (all stats represent SAAR), a 0.4% month-over-month increase. This represents a 77.1% increase from the market potential low point reached in February 1993. Contributing factors include mortgage rates (which will remain close to 3%), millennials forming households, and more existing homeowners tapping into equity to upgrade. Today, potential existing-home sales is 712,052 million, or 10.3% below the pre-recession peak of market potential, which occurred in April 2006. Furthermore, the market for existing-home sales outperformed its potential by 3% or an estimated 183,790 sales, and the market performance gap increased by an estimated 136,731 sales from December 2020 to January 2021. First American's Chief Economist Odeta Kushi says housing-demand dynamics offset the negative impact of the country's limited supply of for-sale homes. "Millions more millennials will age into their prime home-buying age in 2021, and they will do so at a time of historically low interest rates,” said Kushi. “Working against them is the extremely limited supply of existing homes available for sale, especially homes priced for first-time homebuyers. In January, the positives of market demand overcame the negatives of supply, fueling a boost of approximately 512,000 potential home sales relative to one year ago."