Fear over the economy is causing homeowners to pull back on home improvement projects, according to Home Depot executives.
On Tuesday, the company announced that comparable U.S. store sales for the second quarter of 2024 dropped 3.6 percent according to a Home Depot news release.
The company now expects sales for the year to decline somewhere between 3 percent and 4 percent.
Earlier estimates predicted this quarter would have a 1 percent sales dip in stores open at least a year, according to CNN.
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“During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects,” Home Depot CEO Ted Decker said.
Home Depot CFO Richard McPhail said contractors are telling the chain that consumers are nervous in a new way, according to CNBC.
“Pros tell us that, for the first time, their customers aren’t just deferring because of higher financing costs,” he said. “They’re deferring because of a sense of greater uncertainty in the economy.”
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Decker said housing market issues have trickled down to impact Home Depot.
“The higher interest rate started to impact the housing market in housing turnover in particular, which is down some 40 percent,” Decker said, according to The Street.
“And I think last quarter, last month, we saw numbers that on an annualized basis, we’re approaching 40-year lows. That’s also impacting customers’ interest in financing larger projects,” he said.
The big picture also has clouds that are impacting homeowners as they consider large projects.
“There’s just a lot of noise with political and geopolitical environment, unemployment ticked up, inflation keeps eating away at disposable income,” he said.
” I think people just took a pause as we progress through the quarter — or more of a pause — because of these macro uncertainties,” he said.
Karine Jean-Pierre claims Biden “inherited” an “economy that was on the downturn.”
When President Trump left office, inflation was 1.4%, gas was $2.39/gal, and mortgage rates were ~2.7%.
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Home goods company Wayfair said the housing market is also at the root of its struggles.
“While you’ve seen many of our peers that are impacted by housing declined to an even greater degree than Wayfair, at the end of the day, with housing turnover levels that haven’t been as depressed since the great financial crisis, the market fatigue weighs on everyone in the category, ourselves included,” Wayfair CEO Niraj Shah said during an Aug. 1 call.
Home Depot said in its release that it has 2,340 stores and over 760 branches in the U.S., Puerto Rico, the U.S. Virgin Islands, Guam, Canada and Mexico. Home Depot employs more than 465,000 people.
