Home Depot Cites Steady Housing Demand as Sales Beat Estimates

Atlanta-based home improvement retailer Home Depot reported results for the fourth fiscal quarter ended February 1 that exceeded market forecasts, although sales were hampered by an extra week in the comparable period a year earlier. The company recorded adjusted profit of $2.57 billion, or $2.58 per share. The key comparable sales metric for stores open at least a year rose 0.4%, a better result than the average forecast compiled by Bloomberg. However, the company's management in its comments pointed to clear caution among U.S. consumers, which impacts future prospects. Home Depot customers, predominantly middle- and higher-income homeowners considered one of the strongest spending groups in the economy, are beginning to limit their purchases. The main reasons for this phenomenon are concerns about housing affordability, uncertainty about job stability, and high financing costs associated with interest rate hikes. The company does not expect a quick improvement in these macroeconomic pressures. The U.S. housing market, after a boom period driven by low interest rates during the COVID-19 pandemic, began to cool with a series of rate hikes by the Federal Reserve starting in March 2022. As a result, real estate prices began to fall, and home sales transaction volumes reached historically low levels, making decision-making difficult for both buyers and sellers.