An improving housing market resulted in higher sales for do-it-yourself retailer Home Depot.
On the heels of a rise in U.S. home prices in May, Home Depot announced a 17.2% increase in fiscal second quarter earnings on 9.5% higher sales. Net earnings for Home Depot’s second quarter ending August 4th totaled $1.8 billion on revenues of $22.5 billion, up from $1.5 billion on revenues of $20.6 billion a year ago. The company now expects overall sales to grow 4.5%, compared to the prior forecast of a 2.8% rise.
The increase in home prices indicates that the housing market is recovering on the heels of a recession mainly caused by a bubble in the U.S. housing market. During the downturn, Home Depot’s sales at established stores fell more than 20% in such markets as Florida and California. Builder confidence in July has been increasing for the past two years and in July reached an eight-year high.