Over the past few weeks, we've written about the negative impact of high interest rates on home-related retailers, including Home Depot and Lowe's. We can see the linkage between Lowe’s visitation trends and 30-year fixed mortgage rates in the two charts below.
As such, it wasn’t surprising to hear the discussion with these retailers at this week's Goldman Sachs Annual Global Retailing Conference principally focused on the macro. What wasn’t discussed is how a large market like Florida (8% of chainwide visits) generally leads the nationwide average by five months; we are three months in with Florida trending higher as shown in the chart below.
When thinking about cyclical industries and markets this is called “the first one in, is the first one out.” Lowe’s Florida has been rebounding for three months. The nationwide average has been bouncing around flat since May. With the rapid decline in 30-year mortgage rates (currently 6.35%) and Florida improving, it looks like Lowe’s nationwide trend may be primed to move higher.
