Home Depot Inc., providing an optimistic view on the U.S. housing market, posted first-quarter profit that topped analysts' estimates during the retailer's most important selling season.

Profit in the three months through May 3 was $1.16 a share, excluding a 5-cent-a-share benefit from the settlement of a tax audit, the Atlanta-based company said Tuesday in a statement. Analysts estimated $1.15.

The retailer benefited from the continued rise of U.S. housing prices and the early arrival of warm weather, which spurred Americans to work on their homes' exteriors. The spring is Home Depot's biggest revenue generator a even more important than Christmas a and the retailer has worked to make it a promotional blitz on par with the holiday shopping season.

"We had a stronger-than-expected start to the year as we experienced a more normal spring across much of the country and continued recovery of the U.S. housing market," Chief Executive Officer Craig Menear said in the statement.

Fresh data released by the Commerce Department Tuesday underscored the homebuilding industry's health. U.S. housing starts surged 20 percent in April to the highest level in more than seven years.

Home Depot projected profit per share this year will be $5.24 to $5.27, up from a previous forecast for as much as $5.17. The projection includes the audit benefit, and the low end of the range assumes that the U.S. dollar will remain at current exchange rates.

The higher forecast is "encouraging," even after backing out the tax item, Kate McShane, an analyst at Citigroup Inc., said in a note.

advertisement | advertise on newsday

"Home Depot reported another strong quarter, at a time that retailers across the board are struggling to drive sales," David Strasser, an analyst for Janney Montgomery Scott, said in a research note.

Same-store sales, a key yardstick of success in retail, rose 6.1 percent in the quarter. That's the biggest increase for the first quarter since 2004. Analysts projected a gain of 5.5 percent, according to Consensus Metrix. Total revenue rose 6.1 percent to $20.9 billion, topping the average estimate of $20.8 billion.

Menear, a longtime Home Depot executive, took over for retiring CEO Frank Blake in November. Under Blake, the chain shifted from seeking growth through store openings to boosting the performance of current locations and the Web. That proved to be a prescient move as many retailers are now closing stores or shrinking them while people buy more online.

First-quarter net income rose 15 percent to $1.58 billion, or $1.21 a share, from $1.38 billion, or $1, a year earlier.

While the housing starts figures were encouraging, the world's largest home-improvement chain cares more about residential real estate prices. The National Association of Realtors expects about 5.83 million new and existing homes to be sold this year, but there are about 74 million American homeowners who may spend more on their dwellings if they think they're rising in value.

The data on the pricing front has been strong as well. The median price of a single-family home rose 7.4 percent in the first three months of the year, according to the Realtors group. Prices climbed in 85 percent of U.S. metropolitan areas, the group said.