Home Depot sales cool along with real estate market

ATLANTA (AP) — Strains in the nation’s housing sector emerged in the aisles of Home Depot in the last few months of 2018 and appear likely to carry over into this year.

In the fourth quarter, Home Depot fell short on profit, revenue and same-stores sales as rising real estate prices cast a chill over U.S. home sales.

The company does not expect its comparable-store sales growth, a key gauge of health in the retail industry, will be as strong this year as it was in 2018.

Shares fell 3 percent Tuesday at the opening bell as more disconcerting news about the U.S. housing market continued to roll out.

The number of homes being built in December plunged to the lowest level in more than two years, the Commerce Department reported Tuesday, a possible sign that builders anticipate fewer new homes will be sold this year.

Housing starts fell 11.2 percent in December from the previous month to a seasonally adjusted annual rate 1.08 million. It’s the slowest pace of construction since September 2016.

Supply stores like Home Depot can often thrive when new home sales dip because people will buy existing homes, rather than new.

However, the National Association of Realtors said last week that sales of those homes dropped 1.2 percent in January to their worst pace in more than three years, signaling that the weakness in the U.S. housing market more broad.

Would-be homebuyers are increasingly priced out of the market as years of climbing prices and slim housing inventories put ownership out of reach for many Americans.

Those declines can ripple out to companies that sell materials like Home Depot and its rival, Lowe’s.

For the three months ended Feb. 3, Home Depot earned $2.34 billion, or $2.09 per share, for the three months ended Feb. 3. That’s far short of the per-share earnings of $2.22 Wall Street was looking for, according to a survey by FactSet, though an extra week in the period helped push profit and sales higher.

A year ago the Atlanta home improvement retailer earned $1.78 billion, or $1.52 per share.