Home Depot says that consumers in the United States are not feeling entirely comfortable with the economy and are spending less on home renovation projects.
The construction materials giant has significantly lowered its sales expectations for the year. The company stated that customers are spending less on home renovation projects, pressured by rising interest rates and concerns that the economy is worsening.
Home Depot’s sales at stores open fell 3.6% in the last quarter, the company reported on Tuesday (3). The expectation is that 2024 will close with a decline of between 3% and 4% in sales compared to last year.
Home Depot’s business is closely tied to the real estate market, and high interest rates are slowing down property turnover, consequently affecting renovation activities.
Home Depot executives said that consumers are undertaking fewer large projects. This has translated into a decline in sales of building materials, lumber, and construction-related equipment. Home prices are skyrocketing across the country, and demand continues to outstrip supply in most markets.
The median price of an existing home in the United States rose to $426,900 in June, a 4.1% increase from the previous year, according to the latest data from the National Association of Realtors.
However, mortgage rates have fallen slightly since hitting a high of 7.22% in early May. Rates are below the two-decade highs recorded at the end of last year.