Home Depot rebound bodes well for steady housing market

The company increased its annual forecast, with this year’s revenue seen gaining 7 percent and earnings at $9.42 a share. It had previously projected a sales gain of 6.7 percent and profit of $9.31 a share.

Earnings in the first quarter amounted to $3.05 a share, Atlanta-based Home Depot said. Analysts had estimated $2.84.

There were plenty of mixed signals within housing data during the second quarter. While price gains slowed from earlier in the year, they still rose 5.3 percent, according to the National Association of Realtors. Prices also climbed in 161 of 178 metropolitan areas measured.

More homeowners also put properties on the market in June, reversing three years of annual inventory declines, the association said. That could create a glut of properties, which would be a drag on prices. But it could also mean more first-time homeowners and lots of potential new customers for Home Depot.

Simeon Gutman, an analyst with Morgan Stanley, said that while the U.S. housing industry may be nearing the end of its boom, “the broad macro backdrop is strong.” Home Depot will see more comparable-sales growth in the low to midsingle digits for a “protracted period,” he wrote in a research note.

Home Depot offered more evidence that the U.S. housing market is still humming along, reporting secondquarter sales that sent shares higher.

The home-improvement chain said same-store sales increased 8 percent in the three months ended July 29, topping the projected 6.5 percent increase compiled by Consensus Metrix. That was welcome news for investors after results disappointed in the previous quarter, with a longer winter pushing off outdoor renovations. The shares rose 3 percent in early trading.

Home Depot and its smaller rival Lowe’s are often seen as proxies for the health of the housing sector because property owners spend more on their homes when they believe values are rising. But for several quarters there’s been increasing concern that years of robust home-price gains are cooling. For its part, Home Depot has continually said that a shortage of available homes in many markets would actually underpin higher home-improvement spending.

When Home Depot reported that its first-quarter results were hurt by prolonged cold temperatures and snow, it added that property owners had embraced big projects as the weather warmed up in May.

Elaine Thompson / Associated Press Store greeter Danny Olivar, right, lends a hand to a customer to heft an air conditioning unit at a Home Depot store in Seattle.