Bad news for homebuilders is good news for Home Depot and Lowe’s

As construction of new homes slows down, demand to renovate existing homes increases

New York /
Jun.June 05, 2018 10:45 AM

Lowe’s Home Improvement (Credit: Getty Images)

Factors ranging from rising lumber prices to a shortage of skilled workers are slowing down the construction of new homes. While that may be bad news for the housing industry, it’s good news for home-improvement chains like Home Depot and Lowe’s.

As the production of new homes slows down and prices go up, homeowners start seeing their current residences more like investments, making them more inclined to take on renovations like a new bathroom or a backyard patio, according to Bloomberg.

There are currently 123 million occupied homes in the country — a far greater number than the roughly 1 million housing starts expected in 2018 — and the inventory is likely to only get tighter as millennials start settling down with children and families.  The amount of young adults living at home hit a high of 32 percent in 2016 but has since started to decline.

The country’s housing stock is also getting older, with 51 percent of residences more than 40 years old in 2016, according to John Burns Real Estate Consulting. This leads to more home repairs as well. Lowe’s and Home Depot currently have about $170 billion in combined annual sales.

“What matters is the occupied housing base,” Home Depot CFO Carol Tome told Bloomberg. “That’s a lot of households for us to sell to.” [Bloomberg]  – Eddie Small


Related Articles

arrow_forward_ios
Buildots' Aviv Leibovici, Roy Danon and Yakir Sudry (Buildots)
Construction-tech firm Buildots raises $60M in Series C round
Construction-tech firm Buildots raises $60M in Series C round
A photo illustration of charter bus company North Fork Express (left), Tritec Real Estate's planned Ronkonkoma Hub project (middle) and Tritec Real Estate's principal Robert Coughlan (EverybodyWiki/Orenawong, Tritec Real Estate, iStock)
Holdout threatens massive Long Island development
Holdout threatens massive Long Island development
Midwood’s John Usdan and 210 Douglass Street (Midwood)
Landlord in rush for 421a booted Gowanus business: lawsuit
Landlord in rush for 421a booted Gowanus business: lawsuit
Elad Group's Isaac Tshuva and1299 Third Avenue (Getty, Google Maps)
Elad picks up shovel-ready UES development site
Elad picks up shovel-ready UES development site
Charles Cohen of Cohen Brothers Realty Corporation with 975 Anderson Hill Road in Rye Brook, NY (Google Maps, Wikipedia)
Charles Cohen eyeing Rye Brook redevelopment
Charles Cohen eyeing Rye Brook redevelopment
(iStock, Illustration by Shea Monahan for the Real Deal)
As lawmakers race to electrify buildings, industry pushes back
As lawmakers race to electrify buildings, industry pushes back
Gov. Kathy Hochul (Getty, iStock)
With 421a dying, apartment project financing “has come to a stop”
With 421a dying, apartment project financing “has come to a stop”
Madison Realty Capital's  Zach Kadden with 364 Bay Street (LinkedIn, Loopnet)
Madison Realty Capital plans 100 small apartments, a NYC rarity
Madison Realty Capital plans 100 small apartments, a NYC rarity
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...