Investors look to home remodeling retailers Lowe's Companies Inc. LOW and Home Depot Inc. HD for information on the state of price inflation and demand in the home building and renovation industries.
Home Depot, which issued earnings on Tuesday, beat consensus estimates on the top and bottom lines. The home retailer said its profits rose to $4.3 billion, or $4.24 per diluted share, up from $4.1 billion, or $3.92 per share, from the same quarter last year.
So, is the housing market crashing?
According to the most recent CoreLogic S&P Case-Shiller Index data, home prices increased 13% year over year in August. This was the fifth straight month of slowing price appreciation, down from the 15.6% increase in July. As of August, both new and existing house sales were down 30%, according to a report released in October by CoreLogic.
Read more: Is There Going To Be A Housing Market Crash In 2023?
“We’re navigating a unique environment,” Home Depot CEO Ted Decker said on Tuesday’s call with investors. “We can’t predict how the macroeconomic backdrop will affect customers going forward.”
The Atlanta-based company's customer transactions were down slightly, more than 4%, but its average transaction prices rose about 9% to $89.67 — this is an indication that the American home owner, while dealing with infaltion, is still remodeling and able to afford home improvement projects.
“Home Depot reported a — better-than-expected comp of 4.3%, reflecting inflation and solid home improvement demand, supported by elevated home prices, healthy remodeling activity, and solid household formation,” wrote Telsey Advisory Group analyst Joseph Feldman in a note to investors Tuesday.
Investors have been wary of the home improvement sector over the last few quarters, fearing that the slowdown in the housing market would spill over to home improvement. Home Depot’s earnings tell a slightly different story.
Read also: Mortgage Payments Have Increased A Staggering 50% From One Year Ago
Home Depot stock has shed 22.5% this year as of Tuesday’s intraday session, while the S&P 500 has fallen 16.1%, and the Dow Jones Industrial Average has declined 7.5%, according to data from Benzinga Pro.
To read about the latest developments in the industry, check out Benzinga's real estate home page.
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