Home Depot's Sales Rise 5.7% as Small Projects Carry a Weak Housing Market

Home Depot reported second-quarter sales of $47.9 billion on Tuesday, up 5.7% from a year earlier, with comparable sales rising 1.7% — well ahead of the 0.9% analysts expected. U.S. comparable sales grew 1.3%.

Net earnings were $4.8 billion, or $4.79 a share, against $4.6 billion, or $4.58, a year earlier. The company reaffirmed its full-year guidance, and the shares rose about 3%.

Doing well in a bad market

The result is more impressive in context than in isolation. Existing-home sales remain near their weakest levels in decades because owners with sub-4% mortgages will not move at today's rates near 6.7%. Housing starts fell 12.4% in July to their slowest pace since 2020.

Home improvement demand is normally tied to both — people renovate when they buy, and builders buy materials when they build.

What has replaced that engine is the homeowner who is staying put. A household that cannot afford to trade up renovates the house it has: a bathroom, a deck, appliances, paint. Executives described exactly this pattern, with smaller projects doing the work that big-ticket remodels used to.

The professional side

The other support is the professional contractor business, which the company has spent years and several acquisitions building out. Contractors serving repair and maintenance demand are less exposed to the transaction market than those tied to new construction, and that mix has held up.

What it says about the consumer

Home improvement spending is discretionary in timing but not in nature — a failing water heater gets replaced regardless of sentiment. The strength in smaller projects and maintenance, alongside softness in large remodels, is another version of the split visible everywhere in the consumer economy this year.

Households are still spending. They are spending on the things they have decided they cannot postpone.