Home Depot (HD) continues to experience a major consumer trend that has recently contributed to lower-than-expected sales.
In response, the company’s executives identified the reason behind the trend and the drastic action Home Depot is taking to calm a major customer concern.
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In Home Depot’s first quarter earnings report for 2025, it revealed that its overall comparable sales dipped by 0.3% year-over-year during the quarter. However, in the U.S., comparable sales increased by 0.2%.
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Despite the increase in sales in the U.S., Home Depot’s visits per location were down by 4.2% year-over-year during the first few months of the year, according to recent data from Placer.ai.
During an earnings call on May 20, Home Depot Executive Vice President of Merchandising Billy Bastek said that customers are continuing to avoid making purchases for large home improvement projects.
“We were pleased with the performance we saw in categories such as building materials, lumber, and hardware,” said Bastek. “However, we continue to see softer engagement in larger discretionary projects where customers typically use financing to fund the project such as kitchen and bathroom remodels.”
Home Depot CEO Ted Decker said during the call that the trend may be sticking due to current “macro uncertainty,” especially amid higher interest rates in the housing market.
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“The large project generally requires some sort of financing,” said Decker. “And while there are literally trillions of dollars of equity available to be tapped in the homes, I think there’s still enough macro uncertainty. And again, those stubbornly high interest rates, people are painting again and working in their yards and doing smaller projects, but just have not engaged in the larger projects.”
Currently, the average 30-year mortgage rate remains above 6%, and consumers are pulling back on buying new homes. Existing-home sales fell 5.9% month-over-month in March, while total housing inventory increased by 8.1%, according to a recent report from the National Association of Realtors.
"Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” said NAR Chief Economist Lawrence Yun in the report. “Residential housing mobility, currently at historic lows, signals the troublesome possibility of less economic mobility for society."
As consumers tighten their spending on larger home improvement projects, Home Depot has decided to address the elephant in the room: tariffs, which have also contributed to recent consumer anxiety.
During the earnings call, Bastek said that Home Depot aims to “generally maintain pricing” as President Donald Trump’s tariffs (taxes companies pay to import goods from overseas) threaten to increase costs for retailers.
Trump recently imposed a 10% baseline tariff on all countries and paused reciprocal tariffs. When the pause on reciprocal tariffs ends in July, about 60 countries will soon see increased tariff rates.
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“We’ve been working with our suppliers for years,” said Bastek. “I mean, one of the hallmarks of Home Depot has always been diversification and diversifying with their supply chain. So during that time, a majority of our suppliers have diversified their sourcing strategies across several countries. We’ve got tremendous flexibility here. I can’t emphasize that enough. We’re already taking action, moving quickly, and we anticipate 12 months from now that no single country outside of the U. S. will actually represent more than 10% of our purchases.”
He also said that customers might see certain items impacted by tariffs disappear from shelves in Home Depot stores.
“There’s items that we have that could potentially be impacted from a tariff that, candidly, we won’t have going forward if it doesn’t make sense inside the line structure,” said Bastek.
A recent Market Pulse survey from InMoment found that consumers are considering taking drastic measures to prepare for Trump’s tariffs.
About 56% of consumers in the survey said they expect prices for goods and services to increase due to tariffs. In response to these expected price hikes, 60% of respondents said they are contemplating shopping less rather than more.
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Home Depot struggles to reverse concerning customer behavior first appeared on TheStreet on May 22, 2025
Home Depot struggles to reverse concerning customer behavior
