The housing market is as yet intensely hot. Yet, there are developing worries about how much longer this strength can last.
Home Depot (HD) detailed earnings and sales that beat Wall Street’s forecasts Tuesday. Lowe’s (LOW) additionally revealed better-than-expected earnings and sales on Wednesday morning, and CEO Marvin Ellison said in a statement that sales were lifted gratitude to “broad-based demand driven by the continued consumer focus on the home.”
In any case, increasing interest rates could eventually be an issue for Home Depot and Lowe’s. Even though the Federal Reserve is required to keep its key short-term rate close to zero for years to come, longer-term bond yields have begun to spike. Furthermore, mortgage rates are impacted more by the 10-year Treasury than Fed rates.
In an inauspicious sign, Home Depot declined to give any guidance for 2021. Its shares fell 3% on the news.
“Increased demand for single-family homes has driven housing turnover and home price appreciation,” said Home Depot chief financial officer Richard McPhail during a conference call with analysts Tuesday. “However, significant uncertainty remains concerning the course of the pandemic, the distribution of vaccines, short-term fiscal policy and how these developments will impact the broader economy and ultimately, consumer spending.”
For the time being, apparently, purchasers are not very concerned.
The most recent housing market numbers actually paint a healthy picture. Customers are anxious to discover more space and will follow through on ever greater expenses for homes.
S&P/Case Shiller and the Federal Housing Finance Agency announced an over 1% monthly increment in their most recent housing price reports Tuesday.
“Both surveys suggest strong momentum and support our view that the housing market remains on solid footing,” said Blerina Uruci, an economist with Barclays, in a report.
The housing market strength is assisting with lifting the costs of lumber as well, which has additionally helped Home Depot. Ted Decker, the retailer’s president, said during the earnings call that “during the fourth quarter, pricing for both framing and panel lumber” flooded, assisting with lifting overall sales.
Forestry organizations have profited by the housing boom and soaring lumber costs also.
Two timber exchange-traded funds with the ticker symbols of WOOD and CUT – the iShares Global Timber & Forestry (WOOD) and Invesco MSCI Global Timber (CUT) ETFs – are each up over 5% this year and have both acquired than 25% in the previous a year.
Developers stay certain that the housing boom will not come to an end right now.
Toll Brothers (TOL) revealed earnings and sales after the market shut Tuesday that easily beat experts’ expectations.
“The housing market remains very strong, driven by a tight supply of new and existing homes for sale, favorable demographic trends, low mortgage rates, and a heightened appreciation for homeownership,” said Toll Brothers CEO Douglas Yearley, Jr. in the earnings release. He added that he expects these market conditions “to continue for the foreseeable future.”