The National Association of Homebuilders (NAHB) announced on Tuesday its housing market index (HMI) rose 5 points to 90 in November from an unrevised October reading of 85. This was the highest reading in the 35-year history of the series.

Economists had forecast the HMI to remain at 85.

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

All three HMI components recorded gains this month, hitting their highest levels ever. The indicator gauging current sales conditions jumped 6 points to 96 in November, while the component measuring traffic of prospective buyers increased 3 points to 77 and the measure charting sales expectations rose 1 point to 89.

NAHB Chairman Chuck Fowke noted: “Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis. Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Another record high for the HMI reflects that housing is a bright spot for the economy. However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front. In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building.”