SANTA ANA, CA—A gradual rise in mortgage rates won't change homebuyers' decision to buy a home; there are many other factors that go into that decision, says First American Financial Corp.'s chief economist Mark Fleming.

In a recent report from the firm, Fleming says, “In January, the market potential for existing-home sales increased to a 6.1-million seasonally adjusted annualized rate, a 0.4% month-over-month increase and a gain of 210,000 SAAR sales from January 2017. The gap between actual market performance (existing home sales) and market potential (potential home sales) has significantly narrowed as actual existing-home sales have surged in recent months; nonetheless, the housing market is still underperforming its potential.”

Fleming adds that potential home sales, while currently at a level of 6.1 million SAAR, are expected to reach an estimated 6.29 million SAAR by the end of 2019, despite a rising-rate environment. “However, while the yearly growth rate in potential sales is currently at 3.6%, it is expected to slow to just below 1% by the end of 2019.”