Dive Brief:

• The Home Depot remains “confident in our ability to manage through the macroeconomic environment as it stands today” and looks ahead to the remainder of 2025, CFO Richard McPhail said, as the Atlanta, Georgia-based company warned that tariffs may prompt price increases.
• Looking to the remainder of the year, the home improvement retailer expects that customers will remain “very healthy,” McPhail said Tuesday in response to analyst questions during the company’s second quarter earnings call. Customers — homeowners or professionals who serve them — have continued to see strong income gains over the past several years and are “sitting on tappable equity of over $11 trillion,” double the amount in 2019, McPhail said. Home improvement demand has persisted, with Home Depot taking steps to capitalize on the trend, he said.
• Yet top executives also warned of potential impact from tariffs implemented by the Trump administration. While it’s “super important to remember that over 50% of our products are sourced domestically and wouldn't be subject to any tariffs,” William Bastek, executive vice president and head of merchandising said, regarding some imported goods, “obviously, tariff rates are significantly higher today than they were when we spoke in May,” he said. “So, as you'd expect, there will be some modest price movement in some categories, but it won't be broad-based.”

Dive Insight:

The warnings of price increases coincide with persistent challenges for the housing market. U.S. home prices slumped by 0.1% in July, marking the third consecutive month where prices declined, according to a report by RedFin. Home prices rose by 2.9% year-over-year, the lowest rate recorded in RedFin’s Home Price Index since 2012, according to a Tuesday release by the company.

Home sales, meanwhile, have continued to shrink, according to data from the National Association of Realtors, continuing a trend begun in 2024, when home turnover rates fell to their lowest level in three decades, the NAR found in a January report.  

Economic uncertainty is also keeping homeowners and professionals from pursuing larger projects, executives said on the call.

“When we talk generally…to our customers, each of our sets of consumers and pros, the number one reason for deferring the large project is general economic uncertainty,” CEO, Chairman and President Edward Decker said Tuesday in response to questions about taxes and interest rates. “That is larger than prices of projects, of labor availability, all the various things we've talked about in the past.”

Lower mortgage rates would “certainly help” ease some of that pressure, Decker said. The company’s “customers still tell us that the rate environment is giving them pause on larger remodeling projects that would typically require debt financing,” McPhail said.  

For its second quarter ended Aug. 3, Home Depot reported net sales of $45.3 billion, a 4.9% increase year-over-year, according to its earnings report. Net earnings remained relatively flat at $4.5 billion.

The company also reaffirmed its guidance for fiscal 2025, anticipating an approximately 3% decline in diluted earnings per share from $14.91 in fiscal 2024, according to its earnings release.  

Rival companies are also tracking home improvement trends and soft demand. Lowe’s reported a 1.1% jump in comparable sales for its second quarter, driven by “solid performance” in both the “do-it-yourself” and professional home improvement categories, Chairman, President and CEO Marvin Ellison said in a statement.

“Despite challenging weather early in the quarter, our teams drove both sales growth and improved profitability,” Ellison said in the statement included in the company’s earnings release Wednesday, where Lowe’s reported approximately $24 billion in net sales for the quarter ended Aug. 1, compared to $23.6 billion for the prior year period.

Lowe’s is also taking steps to achieve growth, completing its $1.3 billion acquisition of Artisan Design Group — a provider of interior design and installation services — this past June.

The acquisition “strengthens our ability to capture a greater portion of Pro planned spend and expands our reach into the new home construction market,” Ellison said in the Wednesday statement. Also Wednesday, Lowe’s announced plans to acquire interior building products distributor Foundation Building Materials for about $8.8 billion, according to a separate release.