Home Depot is being hit hard by the frozen housing market

Home Depot cut its full-year sales forecast Tuesday, citing persistent headwinds from the nearly moribund housing market.

High mortgage rates have sharply curtailed home sales, as would-be sellers are unwilling to give up their 3% mortgage rates in order to move, and would-be buyers are facing the least affordable market since the 1980s. The result: a collapse in housing sales that has pushed turnover down to some of the lowest levels on record.

That’s translated into a slowdown in spending on the kind of larger projects — such as kitchen and bathroom remodels — that drive bigger ticket sales for the home improvement giant. The number of bigger-ticket transactions — above $1,000 — at Home Depot were down 5.8% in the most recent quarter, compared to Q2 of 2023.

“Kitchen, bath, flooring, lighting are all under pressure, and our customers tell us it’s because that larger project is being deferred,” said Richard McPhail, Home Depot’s CFO.

The market didn’t seem shocked by the state of affairs, as Home Depotshares only slipped modestly. But it continues to lag the broader market badly this year, roughly flat compared to an S&P 500 that’s up about 13% in 2024. Rival Lowe’s is doing a bit better, rising about 4% this year.