Home Depot Holds Guidance Steady as Higher Rates Continue to Slow Bigger Renovation Projects

Home Depot’s Quarter Reflected Stable Demand Despite Housing Pressure

Home Depot (HD) reported first-quarter revenue of $41.77 billion, up 4.8% from a year earlier, while adjusted earnings per share came in at $3.43, slightly ahead of Wall Street expectations. The company reaffirmed its fiscal 2026 guidance as management said demand trends remained largely consistent with the broader environment seen throughout 2025.

Net income declined to $3.29 billion from $3.43 billion a year earlier, while diluted earnings per share slipped to $3.30 from $3.45. Comparable sales rose 0.6% overall, with U.S. comparable sales increasing 0.4%. At the same time, customer transactions fell 1.3%, while the average ticket increased 2.3% to $92.76.

CEO Ted Decker said consumers continued facing uncertainty tied to housing affordability and broader economic conditions, even as engagement in smaller home-improvement categories remained steady.

Key Points

• Home Depot (HD) reported first-quarter revenue growth of 4.8% while adjusted earnings slightly beat analyst expectations.
• Larger renovation projects remained under pressure as higher mortgage rates and housing affordability concerns weighed on consumers.
• The company reaffirmed its full-year outlook and continued expanding its professional contractor business through acquisitions and digital investments.

Why Are Larger Home Improvement Projects Still Weak?

Management said homeowners continued delaying larger discretionary renovation projects because of rising mortgage rates, higher fuel costs, inflation pressures, and growing economic uncertainty.

Chief Financial Officer Richard McPhail said customers remained interested in smaller projects such as outdoor improvements and paint purchases, but spending on categories tied to larger remodeling activity — including flooring, lumber, lighting, and millwork — remained weak.

Housing turnover also continued acting as a headwind for the broader home-improvement sector. Home improvement retailers often benefit when consumers buy or sell homes and begin renovation work, but elevated mortgage rates and affordability concerns continued slowing activity across the housing market.

Comparable sales growth of 0.6% slightly missed analyst expectations, reinforcing investor concerns that the broader recovery in home-improvement demand may still take time to develop.

What Supported Home Depot’s Results?

Despite pressure on larger projects, Home Depot continued seeing resilience in several parts of the business.

Online comparable sales increased more than 10% year over year for the fourth consecutive quarter, supported by expanded delivery capabilities and investments in interconnected retail services.

Professional customers, including contractors and tradespeople, continued outperforming do-it-yourself consumers during the quarter. The company said professional customers now account for roughly half of total revenue.

Home Depot also continued expanding its professional ecosystem through acquisitions, including SRS Distribution, GMS, and HVAC distributor Mingledorff’s. Management said those deals are designed to strengthen the company’s position in the estimated $700 billion professional contractor market.

Big-ticket transactions above $1,000 increased modestly by 0.8%, suggesting larger projects have not fully collapsed even as consumers remain cautious.

What Matters Most Going Forward?

Investors remained focused on whether housing conditions and consumer confidence improve during the second half of fiscal 2026.

Home Depot reiterated its guidance for total sales growth of 2.5% to 4.5%, comparable sales growth ranging from flat to 2%, and adjusted earnings growth between flat and 4%.

Management said it expects some improvement later in the year partly due to more normalized weather patterns compared with weaker storm-related demand last year.

Executives also acknowledged risks tied to tariffs, rising fuel costs, higher interest rates, and ongoing macroeconomic volatility.

Shares of Home Depot have fallen more than 12% since the start of 2026, underperforming both Lowe’s (LOW) and the broader S&P 500 as investors continue debating when housing-related demand will recover more meaningfully.

What It Means for Investors

Home Depot’s earnings reinforced that the home-improvement sector remains caught between stable consumer engagement and continued pressure from the housing market.

The company’s ability to maintain revenue growth, gain market share, expand digital sales, and deepen relationships with professional contractors helped offset weakness in larger renovation activity.

At the same time, elevated mortgage rates, affordability concerns, and cautious consumer spending patterns continue limiting demand for major remodeling projects, which remains one of the biggest challenges facing the sector.

Conclusion

Home Depot delivered a largely steady quarter, with revenue growth, online demand, and professional customer activity helping offset ongoing weakness in larger home-improvement projects.

While investors continue waiting for a broader housing recovery to support stronger sales momentum, the company’s reaffirmed outlook suggested management believes demand conditions remain stable even in a challenging macroeconomic environment.

FAQs

Why did Home Depot’s profit decline in the first quarter?

Profit declined as consumers continued delaying larger renovation projects amid higher mortgage rates, affordability concerns, and broader economic uncertainty.

Did Home Depot beat earnings expectations?

Yes. Home Depot reported adjusted earnings per share of $3.43, slightly above analyst expectations of $3.41.

What areas of Home Depot’s business remained strong?

Professional contractor demand, online sales growth, outdoor categories, and paint sales remained relatively resilient during the quarter.

Why are home-improvement retailers facing pressure?

Higher mortgage rates, weak housing turnover, inflation pressures, and cautious consumer spending have reduced demand for larger renovation projects.

Did Home Depot change its full-year guidance?

No. Home Depot reaffirmed its fiscal 2026 outlook, including total sales growth of 2.5% to 4.5% and comparable sales growth ranging from flat to 2%.

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