In an ominous 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 with respect to 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 now, it appears that consumers are not too concerned.
The latest housing market numbers still paint a healthy picture. Consumers are eager to find more space and are willing to pay ever higher prices for homes.
S&P/Case Shiller and the Federal Housing Finance Agency reported a more than 1% monthly increase in their latest housing price reports Tuesday.
“Both surveys suggest strong momentum and support our view that the housing market remains in solid footing,” said Blerina Uruci, an economist with Barclays, in a report.
The housing market strength is helping to lift the prices of lumber too, which has also boosted Home Depot. Ed Decker, the retailer’s president, said during the earnings call that “during the fourth quarter, pricing for both framing and panel lumber” surged, helping to lift overall sales.
Forestry companies have benefited from the housing boom and soaring lumber prices as well.
Builders remain confident that the housing boom won’t come to an end just yet.
“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 home ownership,” 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.”
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