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Appetite for home improvement projects will likely be slow this year, but there is good reason to expect the slowdown to be temporary, according to home improvement retailer Lowe’s (WEAK).
“When you hear these factors with trends like chronic housing undersupply, the formation of millennial households, baby boomers aging in place, and sustained numbers of people working from home, you can see why we believe demand for home improvement will tend to increase over time for both homeowners and professionals,” Lowe’s CEO Marvin Ellison said Tuesday during the company’s fourth-quarter earnings conference call. .
Lowe’s said its comparable sales were down 6.2% in the quarter ended Feb. 2, under continued pressure from DIY customers who are holding back spending on more expensive items. Lowe’s expects comparable sales to decline 2% to 3% for all of 2024.
Sales of already occupied housing remain at a historic low, mortgage rates continue to hover around 7% and housing prices have not cooled, discouraging many people from moving or selling.
Ellison said that due to these factors, the company expects DIY demand to be under pressure in the near term. The other part of this equation is the timing of interest rate cuts from the Federal Reserve, which could boost the housing market and, in turn, big purchases at Lowe’s.
“Even though there is increased confidence in a soft landing, there is still much speculation about the timing of anticipated interest rate cuts in the face of slowing inflation,” Ellison said. “It is also unclear how quickly the consumer will respond to these changes and how quickly their consumption habits will change.”
Some Wall Street analysts aren’t holding their breath that home improvement demand will rebound this year amid higher mortgage rates and a decline in new construction projects.
“Not 2024, maybe the second half of 2024,” DA Davidson managing director Michael Baker told Yahoo Finance Live (video above). “But we don’t want to get too far ahead of ourselves yet. We think same-store sales will certainly continue to decline in the first half and probably even more in the second half. »