DIY meets DIL… do-it-later. Home Depot shares had their best day in a year yesterday after the home-improvement staple dropped better-than-expected earnings. Still, there were some cracks: its sales fell 3% last quarter as shoppers cut back on upgrades like new cabinets and marble countertops. And the # of $1K+ purchases dropped 5% on the year, despite record sales for Halloween items (see: that viral 12-foot skeleton). Home Depot narrowed its annual sales guidance, saying it’s in “a period of moderation” after a pandemic DIY boom.
Home-reno reversal... Home-improvement businesses are caught between two competing trends: a housing shortage, which would typically fuel more projects (think: four-seasons porch), and bloated prices that’ve pinched wallets. Smaller home renos and repair work initially helped offset a drop in larger projects, but those have also started dwindling.
Nailed down: Nearly a quarter of “pro customers” like contractors saw project sizes fall from July to August, and a third of homeowners have said they’re shifting to cheaper materials.
Every house party has to end… Companies like Home Depot benefited early in the pandemic as homeowners invested in repairs and upgrades. But the vibe’s shifted. Folks may feel stuck in their homes as 20-year-high interest rates make new mortgages unappealing. Owners may not want to invest in their houses if they don’t plan to sell soon — and with prices this high, many won’t likely be buying soon anyway. Home-renovation spend is expected to fall to $457B next year, from $486B.