Homeowners weary from economic pressures have put their home remodeling projects on hold as they wrestle with inflation, a fragile job market and higher financing costs, Home Depot executives said.
The nation’s largest home improvement retailer said on Tuesday that sales fell nearly 4 percent in its most recent quarter as consumers pulled back on spending. Net income fell about 13 percent, to $2.6 billion, from a year earlier, beating expectations.
“Our customers are telling us that they’re not investing, certainly in large projects,” Ted Decker, the chief executive of Home Depot, said on a conference call with analysts. “And that has everything to do with consumer confidence and sentiment.”
Company executives said homeowners are worried about jobs, housing affordability and broader uncertainty in the U.S. economy.
Americans have been trying to stretch their paychecks and have turned to low-price retailers like Walmart. Across the U.S. retail sector, consumers continued to spend throughout the holiday season but looked for discounts and more frequently turned to buy now, pay later options.
Housing turnover is at historical lows. A shortage of affordable homes, coupled with higher home prices and interest rates, have kept many house hunters on the sidelines, while owners who have locked in low rates have been hesitant to sell.
“We anticipate these pressures will persist as we have not yet seen a catalyst for an inflection in housing activity,” Richard McPhail, chief financial officer of Home Depot, said on the call Tuesday.
The comments signal that the situation hasn’t improved much since November, when Home Depot said that homeowners were feeling “fatigue” in taking on big projects. In December, the company said that pent-up demand had been building for years and homeowners who had put off projects would eventually complete them.
Homeownership has eluded many Americans, with prices up about 50 percent since the Covid-19 pandemic. As such, market activity has tilted more toward high-income households.
With the housing market frozen, Home Depot has seen “significantly reduced demand for projects and other purchases associated with buying and selling a home,” Mr. McPhail said.
Homeowners who are waiting for the right time to move aren’t putting much more cash into their current homes either. To save money, they may be making repairs to their homes rather than replacing items, company executives said.
Yet despite the strain, people are still spending on some home projects. Home Depot stood by its forecast for the current fiscal year and said it expected sales to rise as much as 4.5 percent. Mr. Decker said that “underlying demand was relatively stable throughout the year.”
Home Depot has worked to expand its professional and contractor services as it invests in more distribution centers and opens new stores. In January, the company cut some jobs and told corporate staff to the return to the office five days a week.
The retailer is competing with Lowe’s to win over contractors. In November, Lowe’s also said that homeowners had pulled back from larger purchases. It is set to report earnings on Wednesday.
Mr. Decker said that big-ticket projects would be the “telltale” sign that demand for home improvement goods was on the upswing.
“We still have not seen that,” he said.
Kim Bhasin is a business reporter covering the retail industry for The Times.
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