It’s hard these days to be a homeowner. The housing-turned-credit crisis has sharply lowered home values across the country, and the proposed solutions have focused more on major industry players than on deed holders. This week, the New York Times reports that Bernanke’s newest innovation is to lower mortgage rates to a level last seen around the time JFK was sworn in — but it would not apply to current residents looking to refinance. Yes, it’s a bleak time for homeowners, and for the businesses that depend on them. As a bellwether of the industry at large, both Home Depot and Lowes are underperforming their annual trend of site traffic from last year.
Even though absolute volume of visitors to each site is greater than last year, a 4-month comparison of month-to-month changes shows negative movement for both home improvement giants when last year that movement was better, if not positive. This trend suggests fewer homeowners are able to shop for home improvement products, let alone spend money toward them. In July, those items were more geared to summer amenities such as dehumidifier, air conditioner and ceiling fans; in October, the products of the season were warmer: insulation, fireplace and heaters.
The site conversion data supports this case. Total transactions on HomeDepot.com and Lowes.com are down from October last year, by 28% and 37% respectively.
An assessment of month-over-month change tells a worse story: last October, each site almost doubled the number of transactions from September; this October, both Home Depot and Lowes saw that number dip. As the housing market declines, it will become increasingly difficult to turn around sales for these home-focused companies. And while they will likely outlast the economic downturn, it is uncertain how much time that will take.