B737-800
Flight Crew Last 90 Days 100; Flight Crew Type 3000
Distraction; Communication Breakdown; Situational Awareness; Confusion
ATC Issue All Types; Deviation - Altitude Overshoot; Deviation - Track / Heading All Types; Deviation / Discrepancy - Procedural Clearance; Inflight Event / Encounter CFTT / CFIT
General None Reported / Taken
Human Factors
ATC assigned a vector '[Heading] 140 and maintain 3;000 ft. until established on localizer....' As Pilot Monitoring I heard the vector and maintain 2;000 ft. until established. Captain heard 2;000 ft. as well and entered 2;000 ft. I read back 2;000 ft. to the controller. The Captain briefed and all checklist items were briefed prior to this event. The Captain flew through the localizer due to his failure to move the localizer frequency from Standby to Primary. He quickly recognized it and visually maneuvered aircraft back toward course. We received a Terrain Alert and we discussed to shallow our intercept angle. The course was intercepted safely. The controller transmitted that the altitude was 3;000 ft. until established. We were at approximately 2;000 ft. at that time. I transmitted that we had heard '2;000 ft. until established' and read that back to him earlier. We maintained 2;000 ft. until glideslope intercept. We landed uneventfully.
Beautiful day; 30 mile visibility; clear skies; airport in sight 30 miles away. Routine departure from ZZZ. At altitude; we were given direct to a fix and descend to 3;000 ft. Approaching the fix estimating 5;000 ft. altitude ATC gave us a clearance: 'Left turn of (EST) about 30 degrees and intercept localizer' which was inside of the fix 'and descend to 2;000 ft.' The First Officer clearly repeated to ATC '2;000 ft.' and no ATC correction was said. I set 2;000 ft. in the altitude alerter and pointed at it until the First Officer repeated '2;000 ft. A slight north wind caused my track just slightly south of center line of final; well within reason; estimate one dot right. As I was correcting and back on centerline the GPWS (Ground Proximity Warning) sounded; when back on center line the GPWS stopped. The hill was always in sight and we were never left of center line; never was there any danger. At that moment ATC asked if we had the airport in sight and we said yes. ATC cleared us for a visual approach to the runway and said our clearance was only to 3;000 ft. Uneventful landing. I clearly heard and after discussion; the First Officer also clearly heard '2;000 ft.""
Flight Crew reported they read back to ATC descend to 2000 feet when ATC meant 3000 feet and then flew through the localizer and received a Ground Proximity Warning.