Consumers are postponing large-scale renovation projects as unfavourable macroeconomic conditions persist and affect the U.S. housing market, Home Depot executives warned Tuesday.
CEO Ted Decker said in the company's fourth quarter revenue report that “continuous pressure is under on large-scale remodeling projects.” He condemned the lack of demand for housing improvement projects regarding “uncertain macroeconomic conditions and higher interest rate environments.”
Billy Bastek, executive vice president of merchandising at Home Depot, told analysts during a revenue call Tuesday. Sales stemming from ongoing hurricane recovery efforts.
Many are turning to flexible funding options for those who are doing the project.
“We continue to use funding to fund softer engagement and greater discretionary projects for our customers, typically kitchen and bath remodeling,” Bastek says. .
In the fourth quarter, sales of Pro customers, contractors, modifiers or maintenance crews with specific accounts, outperformed their do-it-yourself customers.
Meanwhile, the high interest rates on mortgages continue to weigh consumers and the housing market. Last week's average fixed mortgage rate for 30 years was hovered below 7% for five consecutive weeks.
High mortgage rates over the past few years have created a “golden handcuff” effect in the housing market. Confined to a record mortgage rate of under 3% when the pandemic began, sellers further restricted supply and left eager buyers with little choice.
Buyers are now fighting home prices for nearly record highs and rising mortgage rates. Pending home sales in December fell unexpectedly, falling 5.5%, pulling back from the 21-month height.
Bastek also said the company “doesn't expect changes to rate environments or to improve housing sales.”
“As a result, we expect continuous pressure on larger remodeling projects. Given these factors, our outlook for fiscal year 2025 is due to total revenue growth that exceeds sales,” he added.
In addition to tense sellers and buyers of high rates and home prices, the National Home Builder/Wells Fargo Housing Market Index for Single-Family Homes, in five months due to tariff threats from cross-border countries It has dropped to the lowest level. .
“Uncertainty on the Customs Front has helped to push builders' expectations for future sales volumes to a lowest level since December 2023,” NAHB Chairman Carl Harris said in a statement.
