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Key Takeaways
- Economic uncertainty has deterred homeowners from doing larger renovations, though the outlook may be getting clearer now that a tax policy is in place, Home Depot CEO Edward Decker said.
- Still, the home improvement supplier said its forecast assumes there won’t be a resurgence in projects that require borrowing.
- Relatively high interest rates remain a hurdle, CFO Richard McPhail said.
Homeowners may have reason to be more comfortable financing renovations, but Home Depot isn’t counting on a shift in their mindset.
Some of the economic uncertainty giving homeowners pause faded when the federal government enacted a tax policy, Home Depot (HD) CEO Edward “Ted” Decker said while discussing second-quarter results on a conference call Tuesday.
But in the year ahead, Home Depot assumes there won’t be any change in the volume of homeowners undertaking the type of large renovations that require financing, CFO Richard McPhail said.
“Our customers still tell us that the rate environment is giving them pause on larger remodeling projects,” McFail added.
Financial market participants expect that the Federal Reserve will soon start lowering interest rates, which could make borrowing more attractive for those waiting to remodel a home, or buy a house. Homeowners have put off an estimated $50 billion in home improvement spending amid high interest rates, Home Depot and Lowe’s (LOW) have said.
Home Depot reported $45.3 billion in sales—slightly more than analysts forecast—and earnings that narrowly missed expectations. Comparable sales grew 1% year-over-year for the period ended Aug. 3rd, while $1,000-plus transactions rose 2.6%, Decker said.
“Last time we were together, we didn’t know what tax rates would be,” Decker said, according to the transcript.
“That’s all been settled with even some more favorable lowering of taxes and increases in child tax credits and the like,” Decker said, adding: “That should put some more discretionary spending in our consumers’ wallets.”
Home Depot shares climbed over 3% Tuesday, leading advancers in the Dow Jones Industrial Average, as investors welcomed news that the company had maintained its outlook for the remainder of 2025. The company reiterated its full-year outlook for sales rising about 2.8%, and comparable store sales growth of approximately 1%.
This article has been updated since it was first published to reflect more recent share price values.
