The news: A stalled housing market, soft storm-related demand, and a tightening cost-of-living squeeze created a tough backdrop for Home Depot, where comparable US store sales rose just 0.1% YoY in Q3—well below the 1.25% analysts expected.

The retailer also lowered its full-year outlook and missed earnings estimates for the third straight quarter.

The numbers:

• Adjusted diluted EPS was $3.74, down 1.1% YoY and short of the $3.84 analysts forecast.
• Revenues reached $41.35 billion, up 2.8% and ahead of the $41.12 billion expected.
• Comparable sales were 0.2%, better than last year’s 1.3% decline but well short of the 1.36% increase analysts anticipated.

The retailer also sees challenges ahead.

• Home Depot now expects full-year adjusted EPS to fall about 5%, versus its previous call for a 2% decline.
• It projects 3.0% sales growth and slightly positive comparable sales, compared with earlier guidance of 2.8% growth and a 1% comp increase. However, the updated forecast includes roughly $2 billion in incremental revenues from GMS, the building-products distributor acquired earlier this year, which wasn’t included in its prior outlook.

Our take: Home Depot faces broad-based pressures. A frozen housing market, muted discretionary spending, and a persistent cost-of-living crisis are forcing consumers to delay or scale back big-ticket purchases and renovation plans. The company’s tempered guidance indicates that conditions aren’t set to improve quickly, especially with the Trump administration’s tariffs on imported vanities and cabinets adding another obstacle for remodel-focused demand.

These headwinds are likely to extend well into 2026. Housing activity won’t rebound quickly, and while rate cuts may offer some relief, they’re unlikely to meaningfully shift consumer behavior in the near term. With living costs still elevated and economic uncertainty lingering, any pickup later in the year will likely be gradual, not dramatic.

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