Basically, Home Depot (HD) clobbered Lowe's (LOW) during the third quarter. 

Shares of Lowe's cratered early Wednesday to the tune of 6% as the home-improvement retailer reported third-quarter earnings of 88 cents a share, badly missing Wall Street estimates for 96 cents. Net sales rose 9.6% from the prior year to $15.7 billion, trailing projections for $15.8 billion. Lowe's slashed its full-year earnings outlook to $3.52 a share from a previous $4.06. 

"Our third-quarter operating results were below our expectations due to slower sales in the first two months of the quarter. While we expected moderation in the second half of the year, traffic slowed more than we anticipated in August and September before improving in October, which put pressure on our profitability in the quarter," said Lowe's Chairman and CEO Robert Niblock in a statement.

The tone among Home Depot executives on Tuesday was markedly different than Lowe's, suggesting the world's largest home-improvement retailer is the dominant force fueling the continued strength in the U.S. home remodeling market. Wall Street seems to agree that Home Depot is out-executing its smaller rival and may continue to do so in 2017: shares of Home Depot have fallen about 5.9% so far this year compared to a drop of more than 10% for Lowe's.    

Home Depot's third-quarter earnings coming 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 forecast to $6.33 a share from $6.31 a share.

In large part, Home Depot appears to be benefiting the most from an increase in U.S. home values. Rising U.S. home values are leading people to view investing in remodeling their homes as a wise decision. "Our customer is looking at his or her home and saying it's worth more today than it was yesterday. So their home has more value, there is a wealth effect," Home Depot's Chief Financial Officer Carol Tome told TheStreet in an interview.

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 the 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.

"Home Depot's markets are still outperforming," noted Credit Suisse analyst Seth Sigman in a note ahead of the results. In particular, Sigman noted still healthy housing markets where Home Depot has a store nearby are continuing to fuel demand from contractors, and among consumers for appliances and other items online. Added Sigman, "We believe Home Depot is the better play based on industry trends and specific initiatives."

Home Depot told analysts on a conference call that sales to contractors -- which Home Depot calls 'Pro' customers -- outpaced the company's overall same-store sales increase and that sales of appliances rose by a double-digit percentage. It also said same-store sales gained strength in each month of the third quarter, while the opposite happened as Lowe's judging by Niblock's comments. 

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