Lowe’s (LOW: 17.15, +0.33 (+1.96%)), the world’s second largest home improvement retailer, reported better than expected numbers on Monday as the fall of the housing market continued to dampen sales for home construction and improvement products.  Investors celebrated as diluted earnings per share came in 5 cents above analysts expectations at 33 cents per share, even though net income for the quarter was down 24 percent from the same period in 2007 to $488 million. Comparable store sales, another good gauge for how a company is performing, declined 5.9 percent for the quarter.  Nonetheless, sales for the quarter increased 1.4 percent to $11.7 billion, up from $11.6 billion in the third quarter of 2007, beating estimates calling for $11.62 billion. Lowe’s also continued its expansion project during the quarter as they added 39 new stores.

“The third quarter continued what has been a very difficult period for our industry as many exterior      factors weighed on home improvement sales,” Lowe’s Chairman and Chief Executive Robert Niblock told investors during a conference call.

As for the world’s largest home improvement retailer, Home Depot (HD: 19.29, +0.77 (+4.16%)), there was a similar celebration for equally positive earnings news.  Early Tuesday they reported net earnings of $756 million, or 45 cents per diluted share, compared with $1.1 billion, or 60 cents per diluted share, in the same period last year.  Analysts were looking for 38 cents per share.   Sales for the third fell 6.2 percent from the same period last year to $17.8 billion, due to comparable store sales dropping 8.3 percent.

“The housing and home improvement markets remain challenging.