One More Sign At-Home Spending Isn’t Likely Slowing Any Time Soon

Coronavirus-led stay-at-home trend has benefited retailers including Home Depot.
The latest tallies from American consumers’ home-shopping trips suggest those sales bonanzas may not be going away any time soon. 

Existing-home sales rose for the fourth straight month in September to a seasonally-adjusted annual rate of 6.54 million, up nearly 21% from a year ago, the National Association of Realtors said Thursday. The median existing-home price rose about 15% to $311,800. Total housing inventory dropped to 1.47 million, enough to last 2.7 months – a record low at the current sales pace, the trade group said. 

Properties typically remained on the market for just 21 days in September—also an all-time low, NAR said. 

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” said Lawrence Yun, NAR’s chief economist. Demand was aided by record-low interest rates and “an abundance of buyers,” including those seeking vacation homes because of the increased flexibility to work from home, he said.

It’s not just existing homes that are being snatched up. Latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development in September showed sales of new single-family houses in August jumped 43% to more than 1 million from a year earlier. 

“Exceptionally low interest rates, the ongoing movement of millennials into home ownership and some level of desire to move away from our urban centers” will continue to boost demand, home builder PulteGroup
President and CEO Ryan Marshall said on a conference call Thursday, when the company reported a 36% increase in third-quarter net new home orders, with demand driven by both first-time home buyers and other groups. 

Even with the reopenings of the cities and consumers feeling more comfortable going out, the latest home sales data suggest home-related spending and behavior change aren’t likely changing any time soon.

A case in point, Gordon Haskett analyst Chuck Grom  said this month the firm’s latest household survey, its 13th, showed consumer spending on items for their home has reached the highest level during the pandemic. 

Consumer products giant P&G reported this week that its home-care product sales surged more than 30% in the most recent quarter, led by increased demand for cleaning products. The company and rival Reckitt Benckiser both suggest consumer behavior may have changed permanently. 

No. 1 home improvement retailer Home Depot in August reported a record 25% jump in U.S. comparable sales. 

“Our customers engaged with home improvement in a meaningful way,” Home Depot CEO Craig Menear said at the time, adding customers were doing projects from deck building to landscaping. Home Depot noted “very strong performance” across big-ticket categories like appliances, riding lawnmowers and patio furniture.

Costco CFO Richard Galanti said recently the No. 1 membership warehouse club chain has benefited from demand for the home outside of the food area. The company has also seen surprise growing online sales of big and bulky items such as lawn furniture and home exercise equipment, he said in September. 

The stay-at-home trend is benefiting not just those categories directly tied to home. Fast casual restaurant chain Chipotle said Wednesday its third-quarter sales from online orders more than tripled to represent 49% of sales as more consumers work at home and dine-in service remains limited. As consumers eat more breakfast and other meals at home, beverage giant PepsiCo
, for instance, has attracted new customers to its brands like Quaker Oats. 

“We’re investing to retain those new families,” PepsiCo CEO Ramon Laguarta said on an earnings call this month. Even as consumers return to the office, “it’s going to be a much more flexible environment and much more tech-enabled remote kind of work, where consumers will be at home a few days of the week.”

Related on Forbes: P&G, Reckitt Benckiser results show Coronavirus may have changed our habits for good

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