Housing May Hold Some Keys - Ahead of Wall Street

Tuesday, May 20, 2014

(This is Mark Vickery covering for Sheraz Mian while he is away this morning.)

We can begin today's discussion of the pre-market by addressing Home Depot's HD earnings release this morning, where the home improvement retailer beat earnings expectations but came in a little light on revenues. Though with analysts already having discounted the poor weather effects from Q1, a beat on the bottom line may be considered a positive, overall. Home Depot stock is down a bit in lukewarm pre-market activity.

The Housing industry overall has had some weather-related question marks surrounding it of late, although there have been nuggets of good news, as well. Housing Starts reported strongly late last week, although the strength came from condos rather than the more economically important single-family homes. Prior to this, the Homebuilders Sentiment Index was soft compared to expectations.

Weather-related issues aside, homebuilding, while definitely having lost some momentum, does have pent-up demand, low interest rates and new technology and environmentally sound benefits in its favor right now. Both New Home Sales and Existing Home Sales are releasing reports this week, so we're looking for these to help inform the overall Housing picture.

Also, Lowe's LOW — Home Depot's main competitor — will report earnings tomorrow, so it will be interesting to see how its numbers compare. Obviously, the Housing market's health is crucial to the overall U.S. economy, and if we're going to start seeing a spring in growth soon, it may as well start here.

Mark Vickery
Senior Editor