Stocks in home improvement stores have been on the rise recently. Home Depot’s stock has been up by as much as 15% since March and Lowe’s stock by as much as 21.7% since April. While many factors go into the ups and downs of individual stock prices, some items from the housing market are clearly affecting the profits of home improvement stores.
One thing that can not be overlooked is the number of natural disasters that have occurred in this past year. Widespread forest fires, hurricanes, tornados, and even volcanic eruptions have all meant that people need the goods that home improvement stores have. Homeowners prepare in advance for disasters by buying generators, batteries, plywood, and other supplies. Then they go back to rebuild in the aftermath of these calamities.
As Americans choose to hold onto homes, analysts expect them to renovate rather than sell. Higher mortgage rates, lack of available inventory and rising property prices all play a part in this.
Rick Sharga, executive vice president of Carrington Mortgage Holdings, recently put it this way, “We’re seeing people making home improvements because they’ve decided to stay in their house and they want to enjoy it.”
The lack of housing inventory nationwide has meant the many Americans are choosing to invest in projects to improve their homes rather than to move or upgrade. As home equity has risen many Americans are refinancing to renovate, and this is a good sign for home-improvement chains.
In addition, as mortgage rates go up, which seems very likely, people tend to improve their current homes and stay put rather than trading up.