Business

Home Depot boosted by strong housing market

home depot Image copyright Getty Images

Home Depot has reported better than expected sales growth, helped by a strong US housing market.

The hardware retailer's fourth quarter sales rose 9.5% to almost $21bn (£14.9bn) between November and January compared with the same period in the previous year.

The company has benefited from pent-up demand in the housing market.

On Tuesday the National Association of Realtors reported existing home sales rose by 0.4% in January - on top of a 12% surge in sales in December.

Low interest rates, combined with growth in the job market and wage increases, have bolstered the US housing market, but fears of slowing global growth could dampen confidence this year.

Home Depot sales were also helped by unusually warm winter that has allowed more people to continue home improvement projects throughout the winter.

Like-for-like sales rose 8.9% - far higher than analysts' estimates of 5.3% growth.

The higher sales resulted in Home Depot posting a profit of $1.47bn for the fourth quarter, higher than the $1.37bn for the same period in 2014/15.

Shares of Home Depot rose 2% in afternoon trading in New York.

The company also announced it would increase its quarterly dividend by 17% and conduct a $5bn share buyback this year.

Housing market

Despite the recent gains, the outlook for the US housing market in 2016 remained uncertain.

The National Association of Realtors said that housing inventory fell by 2.2% from last year, leading to higher prices. The median existing home price was $213,800 across the US, up 8.2% from January 2015.

"The spring buying season is right around the corner and current supply levels aren't even close to what's needed to accommodate the subsequent growth in housing demand," said Lawrence Yun, the association's chief economist.

"Home prices ascending near or above double-digit appreciation aren't healthy - especially considering the fact that household income and wages are barely rising," he added.

More on this story