(Corrects second paragraph to show Lowe's earnings met expectations)

Top home improvement chain Home Depot Inc reported a higher-than-expected quarterly profit on Tuesday as cost cuts offset weak sales.

Home Depot and smaller rival Lowe's Cos Inc have been hit hard by a U.S. housing market slump. On Monday, Lowe's posted earnings that Thomson Reuters I/B/E/S said matched analysts' expectations and said it expected a housing recovery to begin only by the middle of 2010.

Home Depot said net profit fell to $689 million, or 41 cents a share, in the third quarter ended on November 1 from $756 million, or 45 cents a share, a year earlier.

Analysts on average were expecting earnings of 36 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell 8 percent to $16.4 billion.

Home Depot has been quicker to cut costs and constrict inventory levels than Lowe's, and in some cases has benefited as housing markets improved in regions where it has a heavy presence.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)