Although homebuyers struggle with affordability and low supply, a healthy economy and strong consumer confidence are expected to lead to an increase of sales, according to Freddie Mac’s newly released monthly outlook for May.

Last month, Freddie Mac’s outlook indicated that low housing inventory was responsible for a struggling housing market, and this has now extended into the month of May.

“While this spring’s sudden rise in mortgage rates are taking up a good chunk of the conversation, it’s the stubbornly low inventory levels in much of the country that are preventing sales from really taking off like they should be,” Freddie Mac Chief Economist Sam Khater said.

Although inventory seems to be a reoccurring issue for the housing market, a strengthening economy and consumer confidence are expected to keep home sales on track to increase to 3% this year, according to the report.

“The underlying demand for buying a home is holding up, and will continue to do so, as long as the economy is generating solid job and income growth,” Khater said. “Most markets simply need a lot more new and existing supply to cool price growth and give buyers enough choices.”

Freddie Mac expects that total home sales will increase 3.3% from last year to 6.32 million in 2018, and that consumer spending and economic growth will bring the GDP up to 3.1% in the second quarter and 2.7% for the full year.

Interest rates are expected to increase to 4.9% this year, pulling down refinance activity. And this decrease will even outweigh an expected increase in purchase origination volume. Overall, originations are forecasted to decrease by 6% to $1.75 trillion, according to the company.