What’s News in Earnings: Weak Housing Market Weighs on Home Depot and Lowe’s

Home Depot and Lowe’s both reported second-quarter earnings this week, and the results paint a clear picture: America’s stuck housing market is dragging down the home improvement giants. With borrowing costs high and home sales near a standstill, consumers are holding back on big renovation projects. WSJ reporter Sarah Nassauer joined the show to explain what the numbers reveal about consumer behavior and where these retailers are turning for growth.

The housing market is the root cause

The stagnant housing market is the single biggest challenge for Home Depot and Lowe’s right now. Both companies explicitly called it out as a continuing drag on sales. The logic is straightforward: when people aren’t moving, they aren’t selling houses, and they aren’t taking on the same volume of major home improvement projects. The pandemic-era boom, when people were renovating and upgrading in droves, is firmly in the rearview mirror. Now, the retailers are dealing with an extended period of weak demand tied directly to the real estate slowdown. Forecasts indicate that home remodeling spending will stay essentially flat into next year, meaning there’s no quick rebound in sight.

DIY vs. pro: a split in spending behavior