⚠ Waiting for HousingHigh threat

Home Depot (HD) — threat to the moat

Home Depot's growth waits on houses changing hands, and turnover is at historic lows with no date for a recovery.

Home Depot's results are tied to one thing it cannot influence. The 10-K says the high interest rate environment that persisted throughout fiscal 2025 and the significant increase in home prices have impacted housing affordability, and that together these have contributed to "historically low levels of housing turnover"1.

Comparable sales growth vs housing-linked departments (%)+11.4%Comps FY2021-3.2%Comps FY2023+0.3%Comps FY2025-11.9%Lighting, 2 yrs-5.4%Flooring, 2 yrsHome Depot Forms 10-K fiscal 2023 and 2025; departments fiscal 2023-25; signs in labels
The pandemic surge, then three flat years.

The effect runs through every line. Comparable sales fell 3.2% in fiscal 2023 and 1.8% in fiscal 2024 and rose 0.3% in fiscal 20252. The company's own preliminary outlook puts the whole home improvement market between -1% and +1% for fiscal 20263.

Home Depot has done what it can: kept prices, bought distributors, grown online. None of that moves mortgages. Its recovery case depends on momentum in housing activity4.

The risk is duration. A freeze that lasts another two years at flat comparable sales and rising costs would push the operating margin, already guided to 12.4% to 12.6%5, lower again.

Home Depot is candid about what it can and cannot control. The same 10-K lists commodity price swings, such as changes in lumber prices, among the risks6, and notes that the potential long-term impacts of catastrophic events may lead to changes in demand7. None of those is housing turnover, which is the one that decides the year. Decker said the company was "bouncing along what we hope would be a bottom" in things like turnover8.

The company's view of its market leaves little room. In December 2025 it expected the home improvement market to be between -1% and +1% in fiscal 20269, and said it expects to grow faster than its market10. Growing faster than a flat market is still slow growth.

What would settle the question is comparable sales. The company guides flat to 2.0% for fiscal 202611; a result below zero would say the freeze is deepening, and above 3% that it is ending.

The number that tests this threat
Reported
Comparable sales, latest fiscal year
+0.3% (fiscal 2025) after -1.8% and -3.2%

The housing-driven demand the company cannot control; below zero in fiscal 2026 would mean the freeze is deepening.

Source: Home Depot Form 10-K, fiscal 2025 ↗
References
  1. ReportedThe 10-K says the high interest rate environment that persisted throughout fiscal 2025 and the significant increase in home prices have impacted housing affordability, and that together these have contributed to "historically low levels of housing turnover".
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1A risk factors and Item 7A market risk: housing, interest rates, commodities and shrink. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  2. ReportedComparable sales fell 3.2% in fiscal 2023 and 1.8% in fiscal 2024 and rose 0.3% in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, Pros, SRS, competition and supply chain. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  3. ReportedThe company's own preliminary outlook puts the whole home improvement market between -1% and +1% for fiscal 2026.
    The Home Depot Investor and Analyst Conference release: preliminary fiscal 2026 outlook, a home improvement market of -1% to +1%, an approximately $1.1 trillion addressable market and the Market Recovery Case. — December 2025 · publ. 9 December 2025 · source ↗
  4. ReportedIts recovery case depends on momentum in housing activity.
    The Home Depot Investor and Analyst Conference release: preliminary fiscal 2026 outlook, a home improvement market of -1% to +1%, an approximately $1.1 trillion addressable market and the Market Recovery Case. — December 2025 · publ. 9 December 2025 · source ↗
  5. ReportedA freeze that lasts another two years at flat comparable sales and rising costs would push the operating margin, already guided to 12.4% to 12.6%, lower again.
    The Home Depot fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - fiscal 2026 guidance, the dividend raised to $2.33 a quarter, adjusted EPS of $14.69. — Fiscal 2025 · publ. 24 February 2026 · source ↗
  6. ReportedThe same 10-K lists commodity price swings, such as changes in lumber prices, among the risks, and notes that the potential long-term impacts of catastrophic events may lead to changes in demand.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1A risk factors and Item 7A market risk: housing, interest rates, commodities and shrink. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  7. ReportedThe same 10-K lists commodity price swings, such as changes in lumber prices, among the risks, and notes that the potential long-term impacts of catastrophic events may lead to changes in demand.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1A risk factors and Item 7A market risk: housing, interest rates, commodities and shrink. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  8. ReportedDecker said the company was "bouncing along what we hope would be a bottom" in things like turnover.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  9. ReportedIn December 2025 it expected the home improvement market to be between -1% and +1% in fiscal 2026, and said it expects to grow faster than its market.
    The Home Depot Investor and Analyst Conference release: preliminary fiscal 2026 outlook, a home improvement market of -1% to +1%, an approximately $1.1 trillion addressable market and the Market Recovery Case. — December 2025 · publ. 9 December 2025 · source ↗
  10. ReportedIn December 2025 it expected the home improvement market to be between -1% and +1% in fiscal 2026, and said it expects to grow faster than its market.
    The Home Depot Investor and Analyst Conference release: preliminary fiscal 2026 outlook, a home improvement market of -1% to +1%, an approximately $1.1 trillion addressable market and the Market Recovery Case. — December 2025 · publ. 9 December 2025 · source ↗
  11. ReportedThe company guides flat to 2.0% for fiscal 2026; a result below zero would say the freeze is deepening, and above 3% that it is ending.
    The Home Depot fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - fiscal 2026 guidance, the dividend raised to $2.33 a quarter, adjusted EPS of $14.69. — Fiscal 2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 26, 2026