The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) rose 2 points to 85 in October from an unrevised September reading of 83. This was the highest reading in the 35-year history of the series.

Economists had forecast the HMI to remain at 83.

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

Two of three HMI components recorded gains this month, hitting their highest levels ever. The indicator gauging current sales conditions jumped 2 points to 90 in October, while the measure charting sales expectations jumped 3 points to 88. Meanwhile, the component measuring traffic of prospective buyers was steady at 74.

NAHB Chairman Chuck Fowke noted: “Traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study and other purposes in this Covid-era. However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns. NAHB analysis published last week showed that new single-family home sales are outpacing starts by a historic margin. Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of month’s supply.”