Home Depot Faces Tough Quarter: Sales Down Again as High Mortgage Rates Impact Demand

The sales of The Home Depot, a U.S. home improvement retailer, have been declining for five consecutive quarters.

The Home Depot reported a similar sales decline for the fifth consecutive quarter on the 20th (local time), emphasizing the reduced demand for home improvement due to high mortgage rates and a slowdown in construction.

The Home Depot revealed that its comparable sales decreased by 3.5% in the fourth quarter of the fiscal year, mainly due to a significant decrease in retail sales at building material stores.

Although mortgage rates have fallen from their peak in October for the first time in 23 years, they still impact home sales and construction. In January, new home construction saw the most significant decline since the pandemic, suggesting that the recovery in housing demand may be delayed until borrowing costs decrease further.

Despite the current weakness, analysts still have confidence in The Home Depot’s long-term success.

Neil Saunders, an analyst at GlobalData PLC, said, “A lot of this is driven by consumers turning away from home spending due to the current unfavorable economic background. Fortunately, there is evidence that the housing market may see a slight recovery in 2024.”

Analysts at Wedbush Securities also upgraded their ratings based on a healthy industrial environment in January, with robust professional and general employment, solid wage growth, and increased spending power of homeowners due to rising home prices.