Lowe's, the world's No. 2 home improvement chain by market share, reported a better-than-expected rise in quarterly sales on Wednesday and forecast 2016 sales above estimates as it benefits from a steady improvement in the U.S. housing market.
The company, like bigger rival Home Depot, is benefiting from pent-up demand for houses after the 2008 recession, while low interest rates and growth in jobs, wages and credit have spurred spending on renovations.
The key data point boosting housing-related retailers is home price appreciation, said Brian Nagel, Oppenheimer & Co. senior equity research analyst.
"Since the economic downturn, now several years ago, we've seen very steady home price appreciation in the United States, and what that does is it gives that homeowner consumer the confidence to invest in their home," he told CNBC's "Squawk Box" on Wednesday.
The S&P/Case-Shiller 20-City Composite index showed home prices in major metropolitan areas rose 5.7 percent in December, continuing the trend of 5-plus percent growth, though the pace of gains slowed slightly.
Lowe's said it expects sales for the current fiscal year, which will include an extra week, to rise 6 percent, to $62.62 billion. That handily beats the 4.8 percent growth analysts on average had estimated, according to Thomson Reuters I/B/E/S.