The National Association of Homebuilders (NAHB) announced on Tuesday its housing market index (HMI) rose one point to 68 in September from an upwardly revised August reading of 67 (originally 66). That was the highest level since October 2018.

Economists had forecast the HMI to stay at 66.

A reading over 50 indicates more builders view conditions as good than poor.

The three HMI components were mixed this month. The indicator gauging current sales conditions increased two points to 75 and the component measuring the traffic of prospective buyers remained unchanged at 50. Meanwhile, the measure charting sales expectations in the next six months dropped one point to 70.

NAHB Chairman Greg Ugalde said: “Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor.”

Meanwhile, NAHB Chief Economist Robert Dietz noted: “Solid household formations and attractive mortgage rates are contributing to a positive builder outlook. However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas.”