Home renovation craze lifting Lowe's

With homeowners taking advantage of low rates to refinance, home improvement companies are getting a boost.

By Aimee Picchi Jan 24, 2013 11:56AM

If your neighborhood is like mine, the sounds of drills and hammering have become commonplace background noise. With mortgage rates near record lows, many homeowners are opting to refinance their homes -- and take some money out to help with remodeling their houses. 


Those trends are translating into a boost for home-improvement companies such as Lowe's (LOW), which on Tuesday said it will hire 45,000 seasonal workers to staff up ahead of the spring season. 

It's not just refinancing that's boosting sales of paint and construction supplies: Last year, sales of existing U.S. homes rose to their highest level in five years. 


The pickup in home remodeling is backed up by research from Harvard University's Joint Center for Housing Studies, which earlier this month predicted that spending on home improvements will continue to pick up pace. Bathroom remodel -- Digital Vision, Photolibrary


"Through the first three quarters of 2012, investment in the residential sector was responsible for one out of every six dollars added to our GDP," said Eric Belsky, managing director of the Joint Center, in a statement. "Moving forward, home improvement spending is expected to make an even larger contribution to GDP growth."


Sales of existing homes may rise more than 7% this year, the highest since 2007, reports Bloomberg, citing a median estimate of economists and housing analysts. Prices may gain 3.3%, after jumping 4.5% in 2012. 


Lowe's isn't the only home-improvement company getting a boost from the housing market's resurgence. Paint company Sherwin-Williams (SHW)'s stock surged 74% in the past 12 months. Demand for its paint and higher prices boosted third-quarter sales by 4.8%. The company plans to release its fourth-quarter results on Jan. 31. 


Lowe's and competitor Home Depot (HD) have also seen a boost to their shares amid the housing recovery, rising 44% and 48%, respectively, during the past year. Lowe's has a tentative date of Feb. 25 for its fourth-quarter earnings report, while Home Depot has scheduled its report for Feb. 26.


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2Comments
Jan 24, 2013 1:28PM
Jan 24, 2013 3:07PM
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Fools still borrowing on the future? or fix while you can get the funds to do it?  
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