Home Depot Says Homeowners Are Weary From Economic Pressures

Homeowners weary from economic pressures have put their home remodeling projects on hold as they wrestle with inflation, a fragile job market and higher financing costs, Home Depot executives said. The nation’s largest home improvement retailer said on Tuesday that sales at existing stores were nearly flat in its most recent quarter as consumers tempered their spending. Net income fell about 13 percent, to $2.6 billion, from a year earlier, but still beat analysts’ expectations: “Our customers are telling us that they’re not investing, certainly in large projects,” Ted Decker, the chief executive of Home Depot, said on a conference call with analysts. “And that has everything to do with consumer confidence and sentiment.”

Company executives said homeowners were worried about jobs, housing affordability and broader uncertainty in the U.S. economy. Americans have been trying to stretch their paychecks and have turned to low-price retailers like Walmart. Across the U.S. retail sector, consumers continued to spend throughout the holiday season but looked for discounts and more frequently turned to “buy now, pay later” options.

Housing turnover is at historical lows. A shortage of affordable homes, coupled with higher home prices and interest rates, has kept many house hunters on the sidelines, while owners who have locked in low rates have been hesitant to sell. “We anticipate these pressures will persist as we have not yet seen a catalyst for an inflection in housing activity,” Richard McPhail, chief financial officer of Home Depot, said on the call Tuesday.

The comments signal that the situation hasn’t improved much since November, when Home Depot said homeowners were feeling “fatigue” in taking on big projects. In December, the company said that pent-up demand had been building for years and that homeowners who had put off projects would eventually complete them. Homeownership has eluded many Americans, with prices up about 50 percent since the Covid-19 pandemic. As such, market activity has tilted more toward high-income households.

With the housing market frozen, Home Depot has seen “significantly reduced demand for projects and other purchases associated with buying and selling a home,” Mr. McPhail said. Homeowners who are waiting for the right time to move aren’t putting much more cash into their current homes, either. To save money, they may be making repairs to their homes rather than replacing items, company executives said.