Home Depot Inc. benefited from a solid U.S. housing market and higher job growth that led consumers to spend more at its stores in the holiday shopping quarter, helping the home improvement chain beat sales and profit estimates.

Shares (HD) of the company, considered a barometer for the economic health of U.S. households, rose 3.1% to $247 in early trading.

The U.S. housing market has gained from the lowest mortgage rates in more than three years after the Federal Reserve lowered borrowing costs thrice in 2019.

Sales of existing homes, which make up about 90% of U.S. home sales, surged 9.6% on a year-on-year basis in January, the National Association of Realtors said last week.

"Our fourth quarter results reflect strength in our core business, solid execution around our holiday events and the overall health of the consumer," said Home Depot Chief Executive Officer Craig Menear.

Same-store sales at Home Depot rose 5.2% in the fourth quarter ended Feb. 2, above expectations of a 4.8% increase, according to IBES data from Refinitiv.

The strong rise in sales also indicates that investments in the marriage of Home Depot's online and brick-and-mortar businesses is staring to pay off, boding well for this fiscal year, Jefferies analysts wrote.

Three months ago, the company said the initiative, called "One Home Depot," has not generated the revenue it had expected, prompting the retailer to cut its sales forecast last year.

Net sales fell 2.7% to $25.78 billion, but beat analysts' average expectation of $25.76 billion.

Net earnings rose to $2.48 billion, or $2.28 per share, from $2.34 billion, or $2.09 per share a year earlier. Analysts were expecting earnings of $2.10 per share.

Home Depot also raised its quarterly dividend by 10% to $1.50 per share.