Home Depot Economic Indicators Essay

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Home Depot Economic Indicators

Two of the economic indicators, housing starts and interest rates have a trickle down effect on Home Depot's business. The current outlook for both of these indicators is still , unfortunately, bleak. We are firm believers in Edward Learner's thesis that "Housing is the Business Cycle". It is still considered the source through which we view the economic cycle. According to a survey by PAA Research, the housing market colors every investment idea evaluated and consistently provides the prism to strategically forecast our economic indicators.

The significance of the housing market and it's importance to this economy cannot be overstated. There is a wealth of quality information about real-time
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If we look at Home Depot's business segments and the statistics on new home sales, we can see where the challenge is. According to the Commerce Department, sales of new homes grew by 6.6% in the month, setting the annual pace for 2010 to 307,000 total units sold. Although, there was an increase in September, this annual pace is the worst on new home sales since 1963, even when mortgage rates are at an all time low. This signifies why there would be disappointment from Home Depot. It is quite obvious that they will continue to struggle, at least through the 4th quarter of this year due to an industry dependent upon a strong real estate market.

However, there is an upside. Most of us would think that the U.S. housing market is devoid of positive trends, which according to the National Association of Realtors, is not the case.

The feedback from a national survey shows:

Realtors are generally optimistic about the prospects over the next 6 months. 42% of Realtors expect improvement, while 30% expect it to remain the same. New home sales and inventory have reached trough levels and can only go higher from there. This implies that residential construction will transition from a drag on GDP growth to a modest benefit for the foreseeable future. The housing tax credit worked. Based on the sales data, a number of buyers took advantage of the credit. When real estate assets are in the hands of new buyers, it should be viewed

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