Sales at Home Depot, Lowe's could be helped by increase in U.S. homebuilding, home-improvement activity, experts say

Cindy Allen

LOS ANGELES , May 10, 2012 (Industry Intelligence) – Sales at U.S. home-improvement retailers Home Depot Inc. and Lowe’s Cos. could be helped by an increase in homebuilding and home improvement, both of which are at a three-year high, Bloomberg reported May 10.

Private-residential fixed investment, which encompasses home upgrades, repairs and improvements, rose 9.1% in the first quarter from a year ago to an annualized rate of $360.7 billion. It was the fourth straight quarter of increases and the fastest yearly growth since 2006, according to the U.S. Bureau of Economic Analysis.

Those statistics are “another piece of corroborating evidence” that home-related purchases were “very good” in the first quarter, said Scot Ciccarelli of RBC Capital Markets.

Private-residential spending -- which accounts for about 2.3 percent of gross domestic product -- is highly correlated with comparable-store sales for Home Depot and Lowe’s, the two largest U.S. home-improvement retailers, Ciccarelli said.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc.noted that the nascent housing recovery should bode well for activity related to housing and remodeling.

The primary source of this article is Bloomberg, New York, New York, on May 10, 2012.

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