“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.”
