Lowe’s Comments About Housing Market

Sep 22, 2022 | Finconomics 101, No Bull Economics


•Management reports that there are no signs pointing to a dramatic step-down in consumer strength going into next year.

•90% of Lowe’s customers have existing fixed interest rate mortgages (sub 3%) & are immune to Fed rate hikes.

•Homeowners are incented to stay in their existing homes because the housing stock is short 1.5MM – 2MM houses and it will take a considerable amount of time for building activity to catch up.

•Management believes homeowners have $1.8 trillion in additional savings post-covid to spend on home improvements.

•50% of US homes are 40+ years old, the highest level since WWII.

•Past home price appreciation represents a tailwind to spending on upgrades.

•75% of Lowe’s sales are driven by DIY (do-it-yourself) customers & 25% by professionals (up from 19% in 2018). Management believes it is one of the few large retailers with inventory units that are down mid-single-digits y/y.

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