Home Depot cuts outlook amid housing slump, consumer uncertainty

A slow housing market and increased consumer uncertainty is weighing on home improvement giant Home Depot.

The Vinings-based retailer on Tuesday said it missed expectations in its fiscal third quarter. The company also lowered its full-year profit outlook.

Home Depot is an economic bellwether and its financial results are closely watched as a gauge of consumer spending and the housing market.

Home Depot said its net income dipped to $3.6 billion during the third quarter, down 1.3% from the same period last year.

The company’s sales grew to $41.35 billion, up 2.8% from the third quarter of 2024. But that number included about $900 million of sales from GMS Inc., the Tucker-based specialty building products distributor it recently acquired for $5.5 billion.

Comparable sales for the third quarter increased 0.2%.

Home Depot said a lack of seasonal storms in the third quarter put pressure in categories such as roofing, power generation and plywood. The company had expected demand to increase in third quarter, but that did not materialize, Ted Decker, chair, president and CEO, said in a news release.

“We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand,” Decker said in the release.

The company lowered its full-year comparable sales growth outlook, which it now expects to be “slightly positive” when previously it forecast 1% growth. It also lowered its adjusted earnings-per-share guidance, which it now anticipates to decline 5% from the previous year.

The retailer now expects full-year sales to grow 3%, including $2 billion in incremental sales from GMS, which had not been previously included in its full-year guidance. It previously forecast full-year sales to grow 2.8%.

Joe Feldman, senior managing director and assistant director of research at investment firm Telsey Advisory Group, in a note Tuesday called the company’s results and guidance reduction “disappointing.”

“Nonetheless, we continue to believe Home Depot is taking share and executing well, and the company stands to benefit as housing demand recovers,” Feldman said.

Home Depot had said in August that customers were shying away from large home improvement projects because of high interest rates. At that time, it also noted “modest price movement” on certain goods caused by tariffs instituted by President Donald Trump.

The Federal Reserve has cut interest rates twice since then to address a weakening labor market. Consumers remain worried about persistent inflation, which has risen this year amid global trade wars.

“I’m not so sure 2026 is going to be an easier year,” Decker said last month during a supplier conference held in Atlanta.

“We all know we have a frozen housing market, and we have increasing customer uncertainty,” he told the audience. “And that consumer uncertainty is moving up even into the top income levels.”

Decker mentioned some “signs of promise,” such as lower mortgage rates, which he said could improve housing affordability.