Home improvement giant Home Depot reported a 3.8% drop in fourth-quarter sales, as consumers pulled back on larger home projects amid declining confidence and a sluggish housing market.
Housing market freeze weighs on demand
CFO Richard McPhail told CNBC the company has seen “a gradual decline in consumer confidence” over the past year, calling the current housing market “frozen.”
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Higher interest rates and slower home sales are weighing demand. Homeowners are delaying big-ticket renovations and upgrades typically tied to buying or selling a home.
Despite the sales dip, Home Depot narrowly beat Wall Street expectations, reporting $38.2 billion in revenue for the quarter – slightly above projections. The company opened 12 stores in 2025 with plans to open another 15 this year.
In January, Home Depot announced 800 layoffs, including roughly 150 positions at its Atlanta headquarters, and ordered corporate employees back to the office five days a week.
CEO Ted Decker said the company is focused on driving results while maintaining what he described as a people-centered culture. “In-person engagement enables more meaningful support for store and field associates,“ he said.
Remodeling slowdown spreads
The slowdown is not isolated. Manufacturers tied to housing and remodeling are also feeling pressure. The Wall Street Journal reports homeowners are opting for repairs over replacements – holding off on projects ranging from flooring to HVAC systems.
Carrier Global, which makes heating and cooling units, saw sales fall 3% last year. CEO David Gitlin said homeowners are “limping along with a repair” rather than investing in full replacements.
According to data cited by the Journal from The Freedonia Group, demand for flooring fell 3.5% in 2025, insulation dropped 2.7%, siding 3.6%, and countertops, windows, doors and cabinets all were off between 3.8% and 6.5%.
Tariffs and spring outlook
McPhail also said the company is evaluating the potential impact of the Supreme Court ruling that struck down President Trump’s use of emergency powers to impose certain tariffs.
Executives remain cautiously optimistic about the spring season, particularly as sales to professional contractors remain steadier than do-it-yourself demand.
Editor’s note: An earlier headline characterized Home Depot’s fourth-quarter sales as a decline. Because fiscal 2024 included an additional 53rd week that contributed approximately $2.5 billion in revenue, direct year-over-year comparisons require adjustment. The headline has been updated to reflect this accounting difference.
