Bloomberg.com reports on the relative good fortune of the home improvement retailers, who, to some extent, a profiting from the headwinds facing the home building business.
Soaring lumber prices, rising mortgage rates and a dearth of skilled workers are a triple threat looming over the housing industry right now. That spells bad news for homebuilders, but not for home-improvement chains.
That’s because anything that slows production of new homes -- like an industry labor shortage -- should increase demand for existing ones, and, in theory, boost their values. Rising home prices convince people to see their residences as investments and make them feel better about renovating a bathroom or adding a patio to the backyard with the help of Home Depot Inc. or Lowe’s Cos.
“We don’t build houses, and we don’t really play to” people buying newly-built homes, Home Depot Chief Financial Officer Carol Tome said in a recent interview, citing the 123 million occupied homes in the U.S. that far exceed the approximately 1 million housing starts expected this year. “What matters is the occupied housing base. That’s a lot of households for us to sell to.”
