Builder confidence in the market for newly built single-family homes shot up in August, matching a record set more than three decades ago.

Builder confidence rose six points to 78 in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI now matches a record set in December 1988, standing at the highest reading in its 35-year history.

“The demand for newly built 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,” said Chuck Fowke, NAHB chairman. “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.”

“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,” said Robert Dietz, NAHB chief economist. “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.”

All HMI indices posted gains this month. The index gauging current sales conditions rose six points to 84. The component measuring sales expectation in the next six months increased three points to 78. The index measuring traffic of prospective buyers jumped eight points to reach 65, its highest level ever.

All HMI regions also posted gains. The Northeast skyrocketed 20 points to 65. The Midwest umped 13 points to 63. The South rose 12 points to 71. The West rose 15 points to 78.