ATLANTA – Home Depot’s second-quarter net income jumped 17 percent, helped by an improving housing market and good response to holiday events.
The nation’s biggest home-improvement retailer’s results beat Wall Street expectations and the company raised its full-year earnings and revenue expectations.
A slowly improving employment landscape and extremely low interest rates this year have created such great demand that homebuilders are having some difficulty securing land and keeping pace. That’s good news for home-improvement retailers because as home values improve customers feel more comfortable investing money in projects for their home. Home Depot’s smaller rival Lowe’s Cos. will report results today.
“There were four key factors that drove our performance: strong summer events, a recovering seasonal business, commodity inflation and strength across the remainder of the store,” said Craig Menear, executive vice president of merchandising.
Signs that the housing market is on the upswing are plentiful, including that on Friday the Commerce Department said builders began work on houses and apartments at a seasonally adjusted annual rate of 896,000 in July. That was up 6 percent from June, though below a recent peak of more than 1 million in March.
On the flip side, there are some signs rising mortgage rates may be slowing housing’s breakneck speed, and Chief Financial Officer Carol Tome said the company, like many others, is watching the interest rate environment since consumer spending and mortgage availability could be hurt if interest rates rise.