Friday, March 29, 2024
HomeretailHome Depot and Lowe's cite strong demand in earnings reports, but softening...

Home Depot and Lowe’s cite strong demand in earnings reports, but softening could be ahead

  • Homebuilder sentiment dropped into negative territory in mid-August.
  • Home Depot and Lowe's nonetheless reported relatively strong numbers from professionals in the second quarter.
  • According to one analyst, these housing effects could hit home improvement late this year or early next year.

A customer enters a Home Depot store on August 16, 2022 in San Rafael, California.Justin Sullivan | Getty Images

Spending on home improvement doesn't appear to have taken a big hit with the slowdown in the U.S. housing market, but analysts say the strength may not last.

Home Depot and Lowe's this week cited strong second-quarter sales from professionals such as contractors, plumbers and electricians. The retailers said those customers have a healthy backlog of projects and plenty of pent-up demand for home improvement.

The companies are chalking up the continued strength coming out of the height of the pandemic to housing market conditions because, they say, people staying put in their homes longer could spur renovations. Since the start of this year, the average rate on the 30-year fixed mortgage has nearly doubled and housing starts have declined significantly. This month, the National Association of Homebuilders/Wells Fargo Housing Market Index dropped into the negative territory for the first time since early in the pandemic.

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