Live Updates: US Housing Starts Fall as High Inflation and Interest Rates Bite

Home Depot reported sales rose 6.5% year-over-year to $43.8 billion in the three months to June 30 © Lucy Nicholson/Reuters

Home Depot shares jumped more than 5% after the DIY retailer provided an upbeat assessment of the US homeowner, in a potential offset to recent data suggesting conditions in the housing sector have eased.

High house prices and rising mortgage rates have deterred some potential buyers from entering the housing market. But Home Depot management said home price appreciation had a bigger effect on consumer demand than mortgage rates, and the company’s customer base was not deterred by rising house prices. its products and continued to spend.

“When you look at wealth creation over the past two years, on almost 40% price appreciation, our client is in a very strong position right now,” chief financial officer Richard McPhail told analysts on Tuesday.

“The net position in these homes is so strong, coupled again with people spending more time in their homes,” chief executive Ted Decker said. “Thus, the demand for repair and renovation will increase due to wear and tear.”

The upbeat remarks – along with the company reporting record quarterly sales and profits and confirming its full-year forecast – came as economic data showed the rate of new home construction in the US fell in July. to its lowest level since early 2021.

Asked by analysts whether underlying challenges in the housing market were negatively impacting Home Depot’s business, Decker said, “We haven’t seen anything in our macro housing business yet.”

Home Depot said sales rose 6.5% year-on-year to $43.8 billion in the three months to June 30, while net income jumped 7.6% from last year. a year ago to hit $5.17 billion, or $5.05 per share. These numbers far exceeded Wall Street forecasts.

Average sales per customer increased 9.1% year-on-year to $90.02, primarily due to inflation across all product categories. Sales over $1,000 increased 11.6% in the quarter, driven by strong demand from professional customers.

Still, customer transactions fell 3% to 467.4 million as demand for seasonal products such as grills, mowers and fertilizers fell from a year earlier.

Shares of Home Depot rose 5.4% at lunchtime amid a broader rally in retail stocks as its strong result and a less gloomy outlook for Walmart helped ease investor concerns over a possible recession in the United States.

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