A weakening housing market is beginning to pinch consumers and retailers alike.
Lowe's reported on Monday that it expects its profit numbers to come in at the low end of its forecast because of a softening market for sales of new and existing homes along with a slowdown on home remodeling and improvement projects.
"We remain focused on strategies to drive market share, however near term pressures on the U.S. consumer have led to a more cautious outlook for the second half of the year," said Robert Niblock, Lowe's chairman, president and CEO in a company press release. "Despite the backdrop of declining housing turnover, elevated energy costs and difficult comparisons resulting from active 2004 and 2005 hurricane seasons, I'm confident we have the plans and people in place to ensure we continue to meet the needs of consumers and gain market share."
The National Association of Realtors announced recently that existing home sales have continued to decline and the nation's median home price dropped for the first time since 1995.
Discussion Question: What impact will the housing market have on the broader retail industry?
Falling home prices can be bad news for retail businesses.
Consumers may spend less in stores as they see what for many is their biggest asset reduced in value.
Many also find themselves dealing with home equity loans and refinancing made with the belief that housing prices would continue to rise. Now, many find themselves with having to make repayments while their investment has been sunk into a property that is less valuable than it was. Selling their way out of the situation may be a money losing situation for many in this scenario.