According to foot-traffic data from analytics company Placer.ai, visits to home-improvement retailers Home Depot Inc. and Lowe's Cos. have been steadily increasing as 2023 progresses.
In January, visits to Home Depot HD, +0.47% were down by 7%, while visits to Lowe's LOW, +1.28% were down by 7.3% compared to the same month in 2022. By March, visits to Home Depot were down by 9.8% year over year, and visits to Lowe's were down by 11.1%. However, since then, the visit gaps for both companies have been consistently shrinking every month. In July, the decline in visits was only 4.2% year over year for both Home Depot and Lowe's.
Construction of New Homes Driving Demand
Despite the overall cool housing market, the sales of new single-family homes have played a significant role in the sustained resilience of Home Depot and Lowe's in the first half of 2023, according to Ezra Carmel of Placer.ai. New homes often require various finishing touches both inside and outside, such as fixtures, paint, landscaping, and patio furniture. With the warmer weather encouraging consumers to take on these projects, the visit numbers for these retailers have shown improvement.
Carmel further noted that as new home construction shows signs of increasing, home improvement retailers can benefit not only from the foot traffic generated by builders during the project but also from homeowner visits after the completion of their homes.
Conclusion
The foot-traffic data suggests that Home Depot and Lowe's have witnessed a turnaround in their visit numbers since the beginning of 2023. The demand for home improvement products and services has been boosted by new home construction activities and consumers' inclination towards enhancing their living spaces. This trend bodes well for the continued success of these retailers in the coming months.
Home Prices Reach One-Year High in June
According to the National Association of Realtors, home prices in June hit their highest level in a year. This surge in prices can be attributed to a lack of available homes for sale and a strong demand from buyers.
Home Depot Attracts Wealthier Customers
Home Depot has successfully attracted more traffic from wealthier and larger households, as reported by Placer.ai. The Trade Area Analysis conducted by Placer.ai revealed that during the first half of 2023, consumers within Home Depot's market had a median household income of $74,400. This income level was higher compared to Lowe's captured market, which had a median household income of $69,100. Moreover, Home Depot's trade area also had a higher average number of persons per household (2.67) compared to Lowe's (2.58). These trends suggest that Home Depot's visitors potentially reside in larger family homes, which may require more improvements and maintenance. Additionally, these visitors have the financial capacity to undertake larger home improvement projects.
Upcoming Quarterly Reports
Home Depot will be reporting its second-quarter results on August 15, while Lowe's will report its second-quarter results on August 22.
Stock Performance
In 2023, shares of Home Depot have experienced a 4.8% increase, while Lowe's stock has seen a growth of 12.8%. This contrasts with the S&P 500's overall gain of 16.3% during the same period.
Aarthi Swaminathan contributed.
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