Home Depot Inc, the world's No.1 home improvement retailer, reported a better-than-expected rise in quarterly same-store sales, helped by increased home remodeling activity in the United States and a recovery in the housing market.

The company also raised its full-year sales and profit forecast on Tuesday. Home Depot's shares, which hit a record high on Monday, rose slightly in premarket trading.

The company's same-store sales rose 4.2 percent in the second quarter, beating the average analyst estimate of 3.5 percent, according to research firm Consensus Metrix.

Demand for indoor home improvement products was strong in the quarter, making up for weak demand for outdoor products such as exterior paint and gardening equipment in May and June due to heavy rain in parts of the United States, Wedbush Securities analyst Seth Basham wrote in a note ahead of the results.

U.S. homebuilder sentiment rose in August to its highest level in almost a decade, the National Association of Home Builders said on Monday.

Smaller rival Lowe's Cos Inc is scheduled to report results on Wednesday.

Home Depot raised its profit forecast for the year ending January to $5.31-$5.36 per share from $5.24-$5.27.

The company said it now expected sales to grow about 5.2-6.0 percent, higher than the 4.2-4.8 percent it forecast earlier, partly due to the $1.63 billion acquisition of home products supplier Interline Brands Inc ISHLDI.UL last month.

Home Depot also raised its same-store sales growth forecast to about 4.1-4.9 percent from 4.0-4.6 percent.

The company's net income rose about 9 percent to $2.23 billion, or $1.73 per share, in the quarter ended Aug. 2.

Excluding items, Home Depot earned $1.71 per share, in line with the average analyst estimate.

Net sales rose 4.3 percent to $24.83 billion, beating analysts' estimate of $24.69 billion, according to Thomson Reuters I/B/E/S.

Home Depot's shares were trading at $120.25 before the bell. Up to Monday's close, the stock had risen nearly 14 percent this year. 

Reuters (Reporting by Nandita Bose in Chicago and Sruthi Ramakrishnan in Bengaluru; Editing by Kirti Pandey)