Home Depot reported a sales increase caused by higher prices and demand from professionals

Home Depot Inc. posted stronger-than-expected quarterly results on Tuesday. The demand for construction materials and rising prices allowed the leading U.S. home improvement specialty retailer to reduce the bad effects of the decline in foot traffic.

People who chose to buy real estate when the prices in the housing market rose quickly last year, still spend a lot on home improvement products, despite the fact that the exponential pandemic-driven growth has slowed. 

The company’s comparable sales grew 5.8%, which topped expectations for second quarter. That compared with the average of 14% for the corresponding periods of the past two years.

As reported by the Commerce Department, housing starts in the US suffered a drop, hitting the lowest point in nearly a year and a half. It is assumed that rising mortgage rates and building material prices are impacting the home-building industry. 

However, the CEO of the company, Edward Decker, commented on the situation. The changes in the housing market haven’t affected business performance yet, he said. A large number of home improvement projects that builders work on and strong demand from customers who strive to carry out home repairs themselves keep the company afloat. 

"More than 50 percent of America's housing stock is at least 40 years old, and it has a great influence on the citizens forcing them to improve their living conditions," Dekker said reporting on the company's financial performance.

The company reported second-quarter earnings of $5.05 a share, compared with Refinitiv expectations of $4.94 a share. Home Depot shares are up more than 3%. 

Oppenheimer analyst Brian Nagel expressed hope that the outstanding results and comments from Home Depot would positively influence the concerns of market participants about the upcoming substantial drop in consumer spending.

The company saw a 3% decline in the number of customer transactions and as a result, it decided to maintain its full-year guidance. However, it still announced that it had achieved record financial results for the quarter due to the increasing demand from builders.