This morning’s housing report showed that housing starts fell 13% to 458,000. That’s a record low and it was well below the Street’s forecast of 520,000. I have absolutely no idea why Wall Street was expecting such a high number. With six million unsold homes, until inventory tightens, housing starts will not improve. Another sign of more bad news to come is that building permits dropped by 3.3% to a record low.
Home Depot (HD) reported that its sales dropped by 10% while its earnings rose by 44%. The company has obviously been doing a lot of cost-cutting. Capital spending dropped by two-thirds last quarter.
Like Lowe’s (LOW), I rate Home Depot a Buy.