While the housing market may be as flat as it’s ever been, another key component of residential investment has been rising: home improvement. More owners are now willing to reinvest in their current residences rather than shell out money for a new home.
In January, the Buildfax Remodeling Index rose 22% year over year, to its highest January level since the index was founded in 2004. It was the 15th straight month of increases, so there’s a clear trend playing out. The gain has been broad-based, with every U.S. region posting a year-over-year gain in January. Home remodeling spending is estimated to grow 9.1% in the first quarter.
Numbers like those continue to bode well for big-box home improvement retailers such as Home Depot
The emphasis on home improvement should help bolster the bottom line at Masco
Whether the stocks of these players follow suit is another question entirely. Home Depot, Lowe’s, Fortune, and Sherwin-Williams trade in the 19-20 P/E range, while the faster-growing Lumber Liquidators is priced at 25 times trailing earnings. Masco’s loss for the year makes its P/E meaningless.
So what’s the best play in the home improvement space? Let me know in the comments below.