The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) climbed 6 points to 78 in August from an unrevised July reading of 72. This was the highest reading in the 35-year history of the series, matching the record set in December 1998.

Economists had forecast the HMI to increase to 73.

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

All three HMI components registered gains this month. The indicator gauging current sales conditions jumped 6 points to 84 in August, while the component measuring traffic of prospective buyers climbed 8 points to record 65, and the measure charting sales expectations increased 3 points to 78.

NAHB Chairman Chuck Fowke noted: “The demand for new single-family homes continues to be strong, as low-interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs as measured on the HMI. However, the V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April. Such cost increases could dampen momentum in the housing market this fall, despite historically low-interest rates.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020. Single-family construction is benefiting from low-interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”