The Home Depot Inc.

sales returned to growth in the second quarter as shoppers invested in smaller projects, such as lighting and gardening.

The world’s largest home-improvement retailer said comparable sales grew one per cent in the quarter, modestly below what analysts had estimated but an improvement from a 3.3 per cent slump a year ago.

“These may be shallow gains, but they show a material strengthening over the last quarter and provide confidence that the slump in home improvement is finally over,” GlobalData analyst Neil Saunders wrote in a note.

Home Depot and its competitors have seen sales slow over the past two years as Americans put off buying a new home or taking on larger fixer-upper projects that required financing. The bigger work remains on pause, but consumers are taking on smaller home projects in the meantime, chief financial officer Richard McPhail said.

“Our customers are telling us they are putting projects on hold,” he said. “They are not canceling them.”

The shares rose as much as five per cent in New York trading on Tuesday, touching their highest since Feb. 14. The stock has been trailing the S&P 500 index this year.

Comparable sales in the U.S. accelerated throughout the quarter with more than a three per cent rise in July. Most of Home Depot’s 16 merchandising departments saw sales gains.

Transactions over US$1,000 grew during the quarter and both do-it-yourself and professional spending rose, executives said on a call with analysts. Lower mortgage rates could further drive demand, though the top reason for consumers deferring large projects is how they perceive the health of the economy.

Online sales also increased, as technology investments helped the company to deliver products more quickly.

McPhail said Home Depot was able to maintain pricing levels because most of its imported goods arrived before new tariffs imposed by U.S. President

Donald Trump

. Later in the year, some items will get more expensive, he said. Home Depot sources more than 50 per cent of its items in the U.S. and said it plans to keep prices competitive.

It also reiterated its guidance for the full year. Executives said the guidance does not assume an improvement in outlook for larger projects or a turn in the

housing market

.

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Home Depot is the first U.S. big-box retailer to report earnings, and investors and analysts are looking closely for clues on price changes and shopping behaviors. Among their main questions are how much cost retailers are absorbing and what that means for consumers.

—With assistance from Subrat Patnaik.

Bloomberg.com