Home Depot Cuts Forecast as Consumers Pull Back on Spending

What prompted the downgrade?

Home Depot announced a revision to its sales outlook, citing a slowdown in consumer demand for new‑home purchases and remodeling projects. The retailer highlighted two primary headwinds: increased tariff costs on imported building materials and higher mortgage rates that are discouraging prospective homebuyers.

Impact of tariffs and borrowing costs

Since the implementation of new trade tariffs, the price of lumber, steel and other construction inputs has risen sharply. These added expenses are being passed on to DIY shoppers and contractors alike, squeezing their budgets. At the same time, mortgage rates have climbed to levels not seen in years, making it more expensive for consumers to finance a new home. The combination of higher material prices and pricier financing is dampening enthusiasm for both new construction and major renovation projects.

Home Depot’s response

In response to the softer demand, Home Depot plans to focus on cost‑efficiency measures, streamline its inventory, and boost promotional offers that can help offset the price pressures faced by customers. The company also emphasized its commitment to enhancing the in‑store experience and expanding its online platform to capture shoppers who are increasingly turning to digital channels.

Looking ahead

Analysts suggest that if mortgage rates remain elevated and tariff‑related cost pressures persist, the home‑improvement sector could see continued restraint. However, Home Depot remains cautiously optimistic, noting that long‑term trends such as aging housing stock and a growing interest in home‑based projects could eventually reignite spending once the economic environment stabilizes.