Housing Weakness Splits the Tape: Lowe’s Stabilizes as Home Depot Slips

Markets are getting a clearer read on the housing slowdown from the places that sell the nails and drywall.

Home Depot’s third straight earnings miss and guidance cut put numbers behind something the industry has been hinting at for more than a year. The homeowner is still solvent, but they are not in a hurry to borrow against the house for a new kitchen. 

Comparable sales at Home Depot rose just 0.2 percent, less than half of what analysts expected, and management walked back its full-year profit outlook as larger, financed projects remained on ice.

Lowe’s, by contrast, managed a cleaner print. Same-store sales grew 0.4 percent, it beat on earnings, and the stock rallied more than 5 percent. 

The underlying message was not that home improvement has turned, but that execution and mix now matter more than simply being tied to housing.

The picture that emerges is not a collapse in demand. It is a deferral regime sitting on top of record home equity, cautious consumers, and a mortgage market that has become structurally tighter. 

The numbers from the two big-box chains are turning into a real-time barometer for how quickly that caution normalizes.

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The latest results from Home Depot and Lowe’s tell a more nuanced story than “home improvement is weak” or “housing is back.” They show two very different ways of sitting in the same macro weather.

Home Depot walked into the quarter expecting a gentle acceleration. Management assumed that lower mortgage rates and seasonal storm demand would nudge homeowners off the sidelines. Instead, it ran straight into the same wall it has been describing since mid-2023.

Comparable sales grew only 0.2 percent, well shy of expectations. Adjusted earnings of 3.74 dollars per share missed consensus for the third quarter in a row. The company cut its full-year profit outlook, now guiding to a 5 percent decline in adjusted EPS rather than the 2 percent drop it had previously penciled in.

The explanations were familiar. Housing turnover remains depressed. Big discretionary projects that depend on financing, such as kitchen remodels and additions, are being postponed. 

Consumers are watching layoffs, policy noise, and softer home prices in some markets, and they are “reluctant to take on larger financial commitments” in the words of CFO Richard McPhail.

Even the weather did not cooperate. A year ago, hurricane-driven demand was worth hundreds of millions of extra sales. This year, with fewer storms, that upside simply was not there. 

Store traffic has been flat to negative most months, and same-store sales actually deteriorated as the quarter progressed, ending October down 1.5 percent year over year.

The interesting twist is that Home Depot is not watching its customers trade down. Average tickets rose about 2 percent and big-ticket transactions above 1,000 dollars grew more than 2 percent. 

Premium appliances, tools, and high-spec products still sell. What is missing are the broad, financed renovation projects that historically ride on low rates and strong job confidence.

Lowe’s came in from a different angle and delivered a better headline.

The company reported 0.4 percent comparable-sales growth, an 11 percent jump in online sales, and adjusted earnings of 3.06 dollars per share, comfortably above expectations. It raised its full-year sales outlook to 86 billion dollars, even as it trimmed profit guidance slightly to reflect a tougher backdrop and a recent acquisition. 

The stock responded with its biggest post-earnings gain in years.

Lowe’s did not pretend the environment is easy. CEO Marvin Ellison described the homeowner as financially healthy but emotionally cautious. Inflation, political noise, and questions about the labor market are making customers pause before they commit to bigger projects. That is consistent with what Home Depot is seeing.

Where Lowe’s stands out is in how it is positioned across that same landscape. About 70 percent of its business is do-it-yourself, with 30 percent from professional customers, so it is closer to the everyday homeowner. 

It has been working methodically to grow its Pro exposure, acquiring companies like Foundation Building Materials and Artisan Design Group to deepen its relationships with contractors.

Inside the quarter, ten of fourteen merchandising divisions posted positive growth, including categories like kitchen and bath that are usually associated with larger remodels. Home services showed early signs of life. 

Ellison emphasized that the average homeowner is sitting on roughly 400,000 dollars of home equity, and many are locked into cheap mortgages they are unwilling to give up. That combination makes eventual renovation spend more likely once rates on home equity loans ease.

In other words, both chains are looking at the same macro picture. Lowe’s is simply doing a slightly better job harvesting what demand exists, while convincing investors it can grow share in Pro and services even if the housing market itself stays muted for longer.

What their results share is an important common thread.

Both management teams describe a “deferral mindset” anchored in high borrowing costs, tight credit, and consumer caution rather than outright distress. Homeowners are slower to spend, but default risk is not the story. That matches the broader data on mortgage quality and household balance sheets.

For investors, the HD vs. Lowe’s split is less about picking a winner between two home-improvement chains and more about recognizing what kind of housing cycle this is. This is not 2008. It is something closer to a slow-motion reset where equity is high, credit is tight, and spending returns selectively, not in a rush.

Investor Signal

For now, the housing cycle is expressing itself as delay, not distress. That favors retailers and platforms that can live off maintenance, small projects, and Pro relationships while waiting for the larger renovation wave tied to cheaper home equity financing. 

In portfolio terms, it argues for being selective within housing rather than abandoning the sector. The real risk is not that the consumer disappears. It is that investors misread a long deferral regime as a brief pause and position for a rebound that takes longer to arrive.

October brought the best existing home sales print since February, with annualized transactions rising 1.2 percent to 4.1 million. Prices moved higher as well. The median existing home sold for roughly 415,000 dollars, about 2.1 percent above last year. 

That combination of slightly higher volumes and still rising prices suggests that lower mortgage rates in late summer did coax some buyers back into the market.

The National Association of Realtors is now calling for a 14 percent increase in existing home sales next year as mortgage rates drift toward 6 percent. At the same time, both the trade group and private forecasters caution that even a double-digit percentage lift would leave activity below pre-pandemic norms. 

Inventory has already begun to tighten again after a modest rebuild, and homes are sitting longer, with average time on market drifting out to roughly 34 days.

Economists describe the data as “cautiously optimistic,” not a regime change. Affordability remains the central constraint. Rates are lower than the peak of the hiking cycle but still high relative to the past decade, and home prices have not meaningfully reset. 

Confidence in the labor market and broader economy will have to firm before this tentative pickup in closings becomes a sustained trend.

Investor Signal

An uptick in existing home sales at current prices is less a green light for aggressive risk than an early sign that the floor is holding. This favors exposures that benefit from incremental volume improvements, such as title insurers, select brokers, and maintenance-linked suppliers, rather than levered bets on a full housing revival. The turn, if it is coming, will likely be staircase-shaped, not a V.

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Today’s housing numbers reinforce a structural change in how the United States finances homes. Mortgage debt now stands at about 44 percent of GDP, down nearly 30 percentage points from the peak before the financial crisis and the lowest share since the late 1990s. 

As a proportion of total housing value, mortgage debt has fallen to roughly 27 percent, a 65-year low. Households have more equity and far less leverage than in past cycles.

That sounds healthy, but it masks a serious access problem. The median principal and interest payment has roughly doubled in five years, and lender appetite for risk has compressed. 

Before the crisis, more than a third of mortgages went to borrowers with credit scores below 720. Today that share is closer to one fifth, even after accounting for general improvements in credit profiles. 

Post-crisis regulation, tighter underwriting by Fannie Mae and Freddie Mac, and higher capital costs have made it harder to extend credit to the margin borrower.

The result is a classic two-track market. Strong households with equity and high credit scores can refinance or move when they choose. Millions of would-be buyers who would have qualified in prior decades are shut out, which in turn discourages new construction and reinforces the supply shortage. 

Alternative models, such as large build-to-rent platforms, have stepped into the gap by delivering new single-family housing as rentals rather than owner-occupied stock, but these owners are becoming political targets as frustration over affordability grows.

Investor Signal

Housing’s problem is not just price, it is credit availability. That is a very different setup from 2007. Investors should think about exposure along two axes: who controls scarce capital for new construction and who can profit from households that are renters by necessity rather than choice. At the same time, political risk around institutional ownership of single-family homes is rising. 

The sweet spot may be platforms that can add supply without triggering the backlash attached to “financialization of housing.”

On paper, the housing market has shifted decisively toward buyers. Redfin estimates there were nearly 37 percent more sellers than buyers in October, the widest gap in data going back to 2013. 

That fits the textbook definition of a buyer’s market, where supply meaningfully exceeds active demand. Homes are staying on the market longer. In many metro areas, buyers are regaining the ability to ask for repairs, concessions, and price cuts.

In practice, the opportunity is limited to those who can still clear the affordability hurdle. Roughly three quarters of the largest housing markets remain overvalued by standard measures. Home prices are about 50 percent higher than they were five years ago. 

Mortgage rates have eased from their peak but still sit around the mid six percent range for standard conforming loans. Recent data from the Mortgage Bankers Association show purchase applications down on the week and total loan sizes drifting lower, which suggests that the marginal buyer is trading down, not stepping up.

Real estate firms themselves now cite affordability as their single biggest business challenge, ahead of operating costs. Builders report weaker traffic and softer expectations for sales over the next six months. 

The environment has produced a narrow group of opportunistic buyers with strong balance sheets and a much larger group of would-be purchasers who are sitting out entirely. For many households, this buyer’s market exists more in theory than in practice.

Investor Signal

Labeling this a buyer’s market is technically correct but strategically incomplete. The real divide is between capital that can move and households that cannot. Expect continued pressure on commission-based intermediaries and fragmented brokerages that live off churn. 

The opportunity lies with investors and operators who can bring flexible capital to a market where sellers are gradually accepting that 2021 prices are not coming back, yet buyers still need help bridging the affordability gap.

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Housing and home improvement are not signaling a crash. They are signaling a prolonged adjustment. Home Depot and Lowe’s are living in that adjustment in real time. One is leaning harder on Pro and acquisitions to carry it through a stalled renovation cycle. The other is squeezing more out of a cautious but still solvent homeowner.

Across the Quick Briefs, the pattern is consistent. Existing home sales are stabilizing, not surging. Mortgage credit is structurally tighter, not just temporarily expensive. Inventory is tilting toward buyers, but many of those buyers cannot participate.

For investors, this argues against binary positioning. The more durable edge is likely to come from three types of exposure.

First, businesses that can make money on maintenance, smaller projects, and services while they wait for larger renovations and moves to return. Second, platforms that supply or finance new inventory into structurally undersupplied markets without overreliance on marginal borrowers. Third, selective housing and home-improvement names where management is already adjusting to a longer, slower cycle rather than promising a quick snapback.

The next phase of the housing story will not be decided by a single print on sales or rates. It will be decided by how quickly capital and business models adapt to a world where the American homeowner is still strong on paper, but far more careful about how and when that strength is put to work.