Why the Housing Market and Weather Are Hitting Home Depot Stocks Hard

Home Depot shares fell after a disappointing Q4 report.

The Home Depot might have to start working on its own house after shares fell by over 2 percent on Feb. 26 following a disappointing 2018 fourth-quarter earnings report. Although quarterly revenue and profits were up from the fourth quarter of 2017, a weak housing market, missed expectations and a weak forecast all caused the stock to fall.

The Commerce Department said on Feb. 26 that the number of new homes under construction in December was at the lowest point in over two years, the Associated Press reported. Furthermore, the remodeling market is expected to slow down in 2019, according to the Joint Center for Housing Studies of Harvard University. The lackluster homebuilding and home renovation markets influence Home Depot’s stock performance. Shares of Home Depot stock hovered around $186 on the morning of Feb. 26.

Home Depot vs. Lowe’s: Both Stocks Are Slumping, So Which One Should You Buy?

Home Depot Earnings Slip Due to Housing Market and Weather

Home Depot’s stock dip might seem surprising given its financials. Its total revenue increased by over 20 percent between 2015 and 2018, and its profits have increased in the same time span. Still, its quarterly results fell short on expectations, which worried investors.

And it’s not just Home Depot that’s suffering. Caterpillar, which offers machinery, including products used for construction, also saw its stock dip amid pessimistic growth outlooks.

“Would-be homebuyers are increasingly priced out of the market as years of climbing prices and strained housing inventories put homeownership out of reach for many Americans,” CBS News reported.

See: Places Where 50% of Americans Can’t Afford a Home

Another factor in Home Depot’s disappointing report: weather.

Home Depot CEO Craig Menear told analysts,”Wet weather delays projects, and that is evidenced in our sales performance in the quarter,” CNBC reported.

Also See: Here’s How Much Extreme Weather Costs Taxpayers

How Much Does It Cost to Build Your Own House?

The short answer is “a lot.” How to build your house will depend on your budget and your vision, but either way, be prepared to spend thousands. And thousands. And thousands.

HomeAdvisor lists the typical cost to build a house as between $152,166 and, for more grand designs, $440,233, as of February 2019. HomeAdvisor also noted some other estimates, including:

  • Hiring design professionals will eat into 5 to 15 percent of your budget.
  • Custom homes cost between $100 and $400 per square foot.
  • The average cost of a backhoe is between $70 to $90 an hour.
  • Labor costs vary widely depending on location, but architects can cost $60 to $125 an hour.
  • Expect to pay a minimum of $4,000 for your home’s foundation.

Learn: How to Decide Whether to Buy or Build a House

Should I Renovate My Home?

Despite the stagnant market, you might want to hold off on renovating in the hope of increasing the value of your current house. Less people are buying houses. Besides, some renovations could even hurt your home’s value.

See how climate change will affect your investment opportunities.

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