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Home Depot (HD) shared a cautious outlook for 2026 at its investor day. But if the housing market improves, the company believes that it will see stronger growth.
The company expects same-store sales for the next fiscal year to be in the range of flat to 2%, alongside revenue growth of 2.5% to 4.5%. It expects adjusted earnings to increase between roughly flat and up 4%.
However, if the housing market recovers and consumers return to bigger ticket projects, sales could increase even more. In this case, the company expects same-store sales growth of 4% to 5%, alongside revenue growth of 5% to 6% and adjusted earnings growth of mid-to-high single-digits.
“We’re observing several dynamics that are pressuring housing and unproven demand,” CFO Richard McPhail told investors. “First, the elevated interest rate and mortgage rate environment since 2020 has stifled housing turnover as a result of the mortgage lobby effect.”
McPhail believes that could change soon. “We believe affordability concerns are pushing the housing market towards equilibrium as home prices are trending towards flat.”
Home Depot stock rose modestly in early trading but is down around 10% year to date.
Home Depot CEO Ted Decker said that affordability concerns and general uncertainty have led consumers to stay put in their homes.
“Housing turnover has remained at historical lows since 2023, which has significantly reduced demand for projects associated with buying and selling money,” he said, noting that consumers who put off larger projects could create “pent-up demand [that] can be greater than $20 billion and at some point will be a significant tail.”
Plus, 55% of US homes are now 40+ years old, and McPhail is optimistic they will “require higher levels of maintenance, repair and renovations” in the near future.
For the current fiscal year, Home Depot reaffirmed its outlook for same-store sales to be “slightly positive” and for full-year earnings per share to drop by 5%.