Home Depot’s strong quarterly housing market is still growing

It posted better-than-expected profit in sales and revenue for the first quarter on Tuesday and raised its outlook for the rest of this fiscal year. Shares Home Depot (HD)One in 30 stocks DoveAfternoon trading rose nearly 2%.
Shares rose widely despite Tuesday Weak income From the retailer Walmart (WMT)Say another dove, It fell about 9%. Home Depot competitor Lowin (Low)It reported its first-quarter earnings on Wednesday, down about 1%.
Home Depot is down This year has been a rough start Because of the high interest rates and high inflation, investors are worried about the downturn in housing. Despite the good news on Tuesday, stocks are still down nearly 30% in 2022.
But the new CEO is Ted Decker, who Took over from Craig Manier, head of the long-running Home Depot Earlier this year, it was exciting. He noted in a revenue release that sales were up nearly 4% to $ 38.9 billion a year earlier, the highest in the company’s first quarter in history.

“The solid performance this quarter is even more impressive compared to last year’s historic growth, and we faced a slow start to spring this year,” Decker said.

During a conference call with analysts, Decker added, “Customers continue to tell us that their homes have never been more important and project setbacks are much healthier.” “The medium to long term foundations of demand for home improvement have never been strong,” he said.

Home Depot’s solid numbers can help ease some of the worries about the recession and the possible fall in house prices.

Yes, the Federal Reserve’s rate hike plans could lead to even higher mortgage rates. But experts point out that home sales must continue to burn in conjunction with a tight supply of new homes and a more healthy work market. This is good for home depots.

Higher mortgage rates “will undoubtedly pour cold water on the home market,” said Joe Lavorghna, chief economist at Natixis CIB, in a statement.

But he added, “It’s unusually difficult to diagnose a housing price slump due to a chronic national housing shortage – exacerbated by epidemic housing boom and current supply chain problems preventing new homes from being completed.”

Lavorghna thinks, “the medium single-digit revision in home prices next year is perfectly reasonable.”

In other words, it is unlikely that housing prices will fall as completely as they did in the late 2000s. This is not a recurrence of the subprime mortgage boom and subsequent bust.

“The main problem for homes is still the lack of supply. There is not enough space outside to meet the demand,” said Laura Adams, a senior real estate analyst at Aceable, an online real estate education site. “We did not expect it to burst into another bubble. It could gradually cool down this year and next.”

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