Updated to include CEO comments

Although Wall Street has sent Home Depot's (HD) stock down 7% in the past three months amid slowing sales trends in the U.S. housing market, investors may have underestimated how rising home values continue to fuel the company's business.

Home Depot shares were slightly lower in premarket trading Tuesday as third-quarter earnings came in at $1.60 a share, beating analysts' forecasts of $1.58. Net sales rose 6.1% to $23.2 billion, ahead of estimates for $23 billion. U.S. same-store sales rose a solid 5.9% from the prior year.

The company raised its full-year earnings forecasts to $6.33 a share from $6.31 a share.

The world's largest home-improvement retailer likely has the prolonged increase in home values to thank for its better-than-expected results. Rising U.S. home values are leading people to view investing in remodeling their homes as a wise decision. "We believe home price appreciation, housing turnover, household formation and an aging housing stock in the U.S. continue to support growth in our business," said Home Depot CEO Chairman and CEO Craig Menear on a conference call.

The national median single-family home price reached $240,900 in the third quarter, up 5.2% from $228,900 a year ago and the last quarter's $240,700, according to the National Association of Realtors. It marked a peak in quarterly median sales price. Overall, the median existing single-family home price increased in 87% of the 178 metro markets that were measured.

Subsequently, the National Association of Home Builders recently said its home remodeling index rose four points to 57 in the third quarter. Anything over 50 signals an improvement.

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