House flipping is popular only when there’s profit to be made. For the model to work, the market needs to support it. And today’s overall housing market doesn’t. Don’t believe it? One indicator is the amount of materials being sold to renovate homes. Just ask Home Depot (NYSE: HD) whether customer demand for do-it-yourself (DIY) products is up or down. (Spoiler alert – it’s down.)
Home Depot’s numbers
Sales at Home Depot stores did rise in the second quarter of 2021. They were up 3.4%, which sounds decent. But when you compare this figure to last year’s at this time, when there was a 25% rise in sales, you can see the home improvement party is ending.
Analysts figured home renovation sales wouldn’t hit levels experienced during the pandemic when much of the country was home during lockdown, but the sales figures for this quarter are worse than expected, since analysts predicted the rise in sales would be 4.9%.
The demand for DIY projects being down this quarter might have little to do with house flippers – it could just be from homeowners who aren’t renovating their primary homes as much this year since they’re no longer sheltering in place. But data from Attom, a provider of nationwide property data, backs up the theory of Home Depot’s renovation material sales being an indicator of house-flipping activity.
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Property data from Attom
Attom reports that home flipping rates fell in the first quarter…