What’s going on here?

Home Depot is warning that its sales and profit growth could stall next year, as Americans put big home improvement projects on ice and higher prices pinch their budgets.

What does this mean?

The world’s biggest home improvement retailer now projects same-store sales will be flat to just 2% higher in fiscal 2026, missing analyst expectations for a 2.34% uptick. Profit growth also looks muted, with adjusted earnings per share expected to rise by as much as 4%—short of the 5.6% Wall Street had hoped for. The company’s shares slid 1.6% ahead of its first investor day in two years, signaling investor caution. Both Home Depot and rival Lowe’s have been feeling the pinch as US consumers shy away from expensive renovations, put off by steeper borrowing costs and a choppy housing market, even as mortgage rates inch down. This year, Home Depot stock is down about 10%, while the S&P 500 has surged 16%.

Why should I care?

For markets: Home improvement stocks hit by changing priorities.

Home Depot’s muted forecast underlines how consumer spending is shifting away from large-scale renovations toward more modest, necessary repairs. As a major employer and a leader in housing-related retail, the company is often seen as a gauge for the broader sector’s health. Softer demand and more cautious shoppers have weighed on the home improvement industry, causing Home Depot’s shares to lag well behind the wider stock market’s gains.

The bigger picture: Shaky housing market dampens retail outlook.

Stubbornly high home prices and an uptick in unemployment have soured Americans’ enthusiasm for home projects, and even small drops in interest rates haven’t provided much relief. While Home Depot’s executives remain upbeat about long-term demand, right now, heightened economic uncertainty is clouding sales prospects and making both investors and homeowners think twice.