Source: CNBC—
As the U.S. housing market falls hard from its pandemic-driven highs, home improvement retailers like Home Depot and Lowe’s don’t seem to be feeling the same pain. In fact, they’re faring better than expected.
While homebuilding and home remodeling are integrally connected, the market forces behind each can be different, and that’s what’s happening now.
Home Depot and Lowe’s reported strong quarterly earnings Tuesday and Wednesday, respectively. Lowe’s stock jumped about 5% Wednesday. Executives at both companies spoke bullishly about the prospects for their business in 2023. This comes as home sales, prices and construction are all weakening significantly due to a massive jump in mortgage rates.
Home Depot financial chief Richard McPhail pointed to an “improve in place” mentality among current homeowners, who might have wanted to sell but changed their minds because they could no longer command top dollar.
“All we can do at this point is repeat what our customers are telling us,” McPhail said. “There is a dynamic we don’t see much in the market. With rising mortgage rates, homeowners are staying in place.”
Home prices are still 11.4% higher in October than they were in October 2021, according to CoreLogic, but that annual comparison has been shrinking for several months. Prices are falling month-to-month at a far faster pace than normal seasonal trends.
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