By Praveen Paramasivam and Deborah Mary Sophia
(Reuters) -Home Depot Inc on Tuesday surpassed estimates for quarterly results as demand from builders and higher prices helped the biggest U.S. home-improvement chain cushion the blow from a drop in store visits.
Customers who bought homes during last year's housing boom are still driving demand for home-improvement chains even as the explosive growth seen during the peak of the pandemic has cooled.
Home Depot (NYSE:HD) reported bigger-than-expected comparable sales growth of 5.8% in the second quarter, but that was below the average of 14% in the corresponding periods of the past two years.
Commerce Department data also showed U.S. homebuilding fell to the lowest level in nearly a year and a half in July due to higher mortgage rates and prices for construction materials.
However, Home Depot has not yet seen an impact on its business from broader pressures in the housing market, buoyed by a healthy project backlog for professionals and steady demand from do-it-yourself customers, Chief Executive Edward Decker said.
"Well over half the homes in the United States (are) over 40 years old. (That) supports home improvement for some time to come," Decker said on an earnings call.
Per-share earnings of $5.05 for the second quarter topped Refinitiv IBES estimates of $4.94. Home Depot shares rose more than 3% to $324.42.
"We are optimistic that upbeat results and commentary from Home Depot should help to squelch further ongoing market concerns of a forthcoming, significant pullback in spending," Oppenheimer analyst Brian Nagel said.
Home Depot recorded a 3% drop in customer transactions in the reported quarter and maintained its fiscal 2022 forecasts, but still reported record quarterly results on demand from professionals.
The division catering to professionals including remodelers, handymen and plumbers brings in more of Home Depot's sales than for rival Lowe's (NYSE:LOW) Cos Inc, which reports results on Wednesday.