Privately held retailers of home-related goods and materials are seeing strong sales growth, according to new data from Sageworks, a financial information company. It's a sign that spending related to housing continues to improve, even if new home sales slowed sharply in July, which economists blamed on rising interest rates.
"Though the housing market today still isn't as strong as it was before the financial crisis, our data shows that consumers during the past 12 months have been investing in goods to improve their homes," said Sageworks analyst Libby Bierman. "Privately held stores within the home furnishings and building supplies industries had higher sales growth during the past 12 months than at any other time since the recession."
In the 12 months ended Aug. 1, sales increased 9.7 percent among privately held home furnishings stores and 7.3 percent among private building material and supplies dealers, according to Sageworks' data,
Private furniture stores have had 8 percent sales growth in the last 12 months, on top of a 9.7 percent increase in the year-earlier period.
All three industries experienced sales declines in the 12 months ended August 2010.
Net profit margins for all three industries remained steady, or slightly stronger in the case of home furnishings stores, according to Sageworks' financial statement analysis of industry data.
Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies' operational performance.
Spending on the home has a major impact on the economy, and quarterly reports from home-improvement retailing giants Lowe's (LOW) and Home Depot (HD) last week also reflected an improving environment. Combined, the two reported sales totaling more than $37 billion in the most recent quarter alone, and each said same-store sales saw double-digit percentage growth.
Sales of existing and new homes trigger a wave of new purchases, according to a 2008 analysis by the National Association of Home Builders. The NAHB found that in the first year after buying a home, buyers of new homes outspend non-movers by 2.8 times, and buyers of existing homes outspend them by nearly two times.
Even so, the NAHB said then, "Most of the demand for appliances, furnishings and remodeling project in a given year is generated by non-moving home owners, because they outnumber home buyers by such a wide margin."
