After a record year of housing activity in 2020, this year will see smaller growth in both home prices and sales.

That’s what the top housing economists see ahead for 2021.

“In 2021, the rates of increase are quite a bit lower,” said James Gaines, the former chief economist at the Texas Real Estate Research Center. “We will get back to more normal rates of increase.”

Gaines said the housing industry has been one of the country’s primary economy drivers during the pandemic — and not just because of low mortgage rates.

More than 40% of U.S. home purchases in 2020 were first-time buyers, he said.

“It’s the demographics — particularly those millennials we have been talking about for years and years who are finally getting old enough and looking for homeownership,” Gaines said.

Thanks to pandemic lockdowns that held back their spending for travel and entertainment, many of those young buyers have the cash to head into the home market.

“People have been saving, and some of the first-time buyers are able to come to the housing market with a down payment,” Gaines said. “That’s been one of the limiting factors, to have an initial down payment.

“During the last year, people haven’t been spending as much money and are saving.”

Gaines said those extra savings and record-low mortgage rates in 2020 prompted many first-time buyers to make a move earlier than planned.

“A lot of that demand that might have happened a year or two in the future is being brought current,” he said. “There is no reason to put off buying a house thinking prices and interest rates might be lower.”

Home mortgage costs are already heading higher.

“The low interest rates have been less than 3% for quite a while,” Gaines said. “It’s going to be difficult to keep interest rates as low as they have been.”

Higher mortgage rates are a result of the economy rebounding from the worst of the pandemic, said Robert Dietz, chief economist for the National Association of Home Builders.

“The bad news that comes from the accelerating growth is higher interest rates,” Dietz said. “”Housing affordability headwinds are definitely increasing.

“It is a consequence of the rest of the economy opening.”

Dietz said mortgage rates will gradually increase this year.