Increased profits at home improvement outlets underscore ""Fitch Ratings'"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp view that the housing recovery is in its early stages, the ratings agency said in a release.
[IMAGE]Fitch pointed to ""solid 4Q12 results"" released by ""Home Depot"":http://www.homedepot.com/ (which saw a 4.6 percent rise in same-store sales last year) and ""Lowe's"":http://www.lowes.com/ (which reported a 1.4 percent increase in same-store sales). Fitch projects the two home improvement giants will generate same-store sales growth of 2-4 percent, reflecting--in Fitch's view--""a slightly faster growth rate in sales channels serving professionals.""
Fitch's forecast for Home Depot and Lowe's falls slightly below its forecast of 4 percent growth in total home improvement spending for 2013 (which in turn falls below its estimated growth of 4.5 percent during 2012). The agency expects home remodeling spending will continue to benefit from the improvement in housing turnover this year.
According to Fitch's forecast, existing-home sales will advance 7.7 percent in 2013, while new single-family sales will increase 22.0 percent.
Though the increase in home improvement sales reinforces Fitch's belief that the housing industry is seeing the start of a recovery, Fitch says the recovery will still continue in ""fits and starts.""
""Growth patterns in the intermediate term are likely to be below what the industry experienced during the previous housing boom and the early part of the past decade due to slower growth in the U.S. economy and only moderately improved housing market conditions,"" Fitch said. ""Growth in this segment will also be restrained by tight bank lending standards, which will make it difficult for homeowners to use credit to finance remodeling projects.
""As such, we continue to expect spending for big-ticket remodeling projects that will lag the overall growth in the home improvement sector,"" Fitch concluded.