Home Depot Cuts Outlook as Consumer Confidence Falters

Intermediate | November 28, 2025

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Home Depot Lowers Outlook 2025: A Rough Quarter for Home Improvement

On November 18, 2025, The Home Depot Inc. reported a disappointing third quarter as Home Depot lowers outlook 2025 guidance for the year and lowered its full‑year outlook, raising concerns about the state of U.S. consumer confidence. The company posted revenue of $41.35 billion, a slight increase from last year, but adjusted earnings per share came in at $3.74, falling short of analyst expectations. Reports from AP News noted that transactions dropped and shoppers appeared increasingly cautious as borrowing costs stayed high.

Weak Sales and Housing Market Pressure

As Home Depot lowers outlook 2025, comparable sales rose only 0.2%, while total customer transactions slipped by 1.4%, signaling a slowdown across both large and small purchases. Executives pointed to a sluggish housing market and rising mortgage rates as major challenges. CEO Ted Decker said there was no clear “catalyst” yet to spark a consumer rebound, describing the broader home‑improvement climate as softer than expected. Analysts from the Financial Times echoed this sentiment, noting the link between high mortgage rates, delayed home projects, and cautious spending.

External Factors: Mild Storms and Consumer Anxiety

A surprisingly mild hurricane season contributed to weaker‑than‑usual demand for storm-related supplies such as roofing materials and generators. With fewer major storms, customers had less urgency to purchase repair or emergency items. At the same time, persistently high mortgage rates kept many homeowners from taking on large renovation projects, further weighing on sales. MarketWatch highlighted that these combined factors created an unusual drag on categories that normally perform well during the second half of the year.

Guidance Slashed as Outlook Darkens

Home Depot now expects its adjusted earnings for fiscal 2025 to fall by roughly 5%, a notable downgrade from its previous forecast of a smaller decline. The company also trimmed its comparable‑sales expectations from about 1% growth to a flatter, “slightly positive” range. Reports from Yahoo Finance and Reuters suggested that the lowered guidance reflects broader unease among middle-class consumers, who are delaying big-ticket purchases and prioritizing essentials over discretionary upgrades.

Why This Matters for the Economy

Because Home Depot is considered a bellwether for the home‑improvement and construction industries, its performance offers insight into the financial health of American homeowners. When consumers pull back on renovations or repairs, the slowdown can ripple across multiple sectors, from materials and manufacturing to contracting, financing, and logistics. Business Insider noted that weakening demand from middle-class shoppers may be an early signal of economic stress heading into 2026.

Vocabulary

Catalyst (noun) – a factor that causes a change or event.
Example: “Analysts said there was no clear catalyst for a demand rebound this year.”
Comparable sales (noun) – sales from stores open at least one year, used to measure true growth.
Example: “Comparable sales rose only slightly despite higher revenue.”
Headwind (noun) – something that creates difficulty or slows progress.
Example: “High mortgage rates remain a major headwind for home‑improvement spending.”
Benign (adjective) – mild or gentle; not severe.
Example: “A benign hurricane season reduced demand for emergency products.”
Stagnant (adjective) – not moving or changing; showing little activity.
Example: “The stagnant housing market contributed to weaker sales.”
Bellwether (noun) – an indicator or predictor of trends.
Example: “Home Depot is seen as a bellwether for middle‑class spending.”
Trim (verb) – to reduce or cut down.
Example: “The company trimmed its sales forecast for the rest of the year.”
Unease (noun) – a feeling of worry or uncertainty.
Example: “Consumer unease pushed shoppers to delay non‑essential purchases.”
Discretionary (adjective) – optional or based on personal choice, not necessity.
Example: “Discretionary home upgrades were among the first expenses consumers postponed.”
EPS (Earnings Per Share) (noun) – the portion of a company’s profit allocated to each share of stock.
Example: “Home Depot’s EPS missed expectations for the quarter.”

Discussion Questions (About the Article)

What factors contributed to Home Depot’s weaker performance this quarter?
How did the housing market influence consumer spending?
Why was the mild hurricane season mentioned as a reason for lower sales?
What changes did Home Depot make to its financial outlook?
Why do analysts pay attention to Home Depot’s results when evaluating the broader economy?

Discussion Questions (About the Topic)

How do high interest rates influence home‑improvement decisions in your country?
What home‑related purchases do consumers typically cut first when money is tight?
Why might middle‑class spending be an important economic indicator?
How can retailers prepare for unexpected external factors such as weather changes?
Are you seeing similar economic pressures where you live? Why or why not?

Related Idiom

“Treading water” – working hard just to stay in the same place, without progress.

“Analysts say the home‑improvement sector is treading water as demand remains soft.”

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This article was inspired by reporting from AP News, the Financial Times, MarketWatch, Yahoo Finance, Reuters, and Business Insider.