Home sales will remain strong in 2007

OTTAWA —  Robust activity in the first half of the year will allow home sales to reach record levels again in 2007, according to the Canadian Real Estate Association, which is forecasting an 8.1% increase to 523,100 units. Activity is forecast to drop slightly in 2008, but will reach the second highest annual level on record in almost all provinces. Prices increases are forecast to be smaller next year. Hot markets in British Columbia and Alberta are expected to cool in 2008, although CREA forecasts that annual price increases will be the greatest in those provinces. "The resale housing market will become more balanced as rising prices and higher mortgage interest rates gradually impact affordability," CREA chief economist Gregory Klump said in a prepared statement, adding that high employment will contribute to healthy activity, even if prices and interest rates continue to rise. Meanwhile, the CHMC is a predicting that housing starts will moderate this year to 220,000 a decrease of 3.2% from 2006.

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Lowe’s weathers slumping sales in regional markets

MOORESVILLE, NC — Weak sales in parts of California and Florida, which have been hit hard by the housing slump, have affected second quarter results for Lowe’s. But the second-largest home improvement retailer in the U.S. still posted a 5.8% increase in sales for the quarter ended Aug. 3. 2Q sales stood at $14.2 billion, up from $13.4 billion in the same period last year. Comparable store sales for the period declined 2.6%, and were down 4.4% in the first half of 2007. There were marked regional disparities, with parts of the north-east showing above-average same-store sales, while double-digit negative comps were posted in parts of California and Florida, where Lowe’s recently laid off 200 workers at its distribution centre in Kissimmee. The company did unexpectedly well in certain categories during the quarter, including nursery, landscaping, seasonal and exterior paints. While acknowledging that the market will probably remain "challenging" in the near-term, Lowe’s chairman and CEO Robert A. Niblock said in a conference call that the company was pleased to continue to capture market share and that it expected to see the market improve in the back end of 2007.

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Greenpeace urges sustainable forestry practices

MONTREAL — Environmental watchdog Greenpeace has released a report identifying Canadian companies it says are not doing enough to prevent the destruction of the country’s boreal forest. Among the 35 companies listed in the report are Best Buy, Sears and RONA, all customers of Abitibi-Consolidated, Bowater, Kruger and SFK Pulp, which Greenpeace says practice destructive logging. The report also condemns the governments of Ontario and Quebec, which it says do not do enough to protect forest from industrial development. Responding to the report, RONA issued a statement that it does not buy any product derived from endangered species and that it favours the purchase of product that bears Forest Council Stewardship, Canadian Standards Association, Sustainable Foresty Initiative, and ISO 14001 certifications. Earlier this year, RONA announced it was reviewing its sustainable development practices and would make public a strategic plan for environmental responsibility at the end of October.

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Sale of HD Supply hits snag

ATLANTA — Home Depot has disclosed that the three private equity firms that agreed to purchase its HD Supply business want to restructure the $10.33 billion deal. Two factors — a persistently weak housing market and a drying up of liquidity in financial markets — appear to have influenced the investors’ decision, and Home Depot said these discussions "could result, among other things, in material changes to the terms and financing of the transaction." If the purchase price goes down, that could also affect Home Depot’s tender offer to buy back $22.5 billion of its stock, which will be partly funded from the proceeds of the HD Supply sale.

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