Home Depot reports significant revenue growth despite housing market challenges

In the United States, Home Depot Inc. reported a revenue increase for the first quarter of the fiscal year, indicating customer engagement in smaller home improvement projects. For the three months ending May 4, 2025, the company earned $3.43 billion, which represents a slight decline from $3.6 billion in the same period last year. The revenue also rose to $39.86 billion from $36.42 billion a year earlier, surpassing analysts’ expectations of $39.3 billion. However, sales at stores open for at least a year decreased by 0.3%, and comparable store sales in the U.S. grew only modestly by 0.2%. The average shopper’s spend also slightly increased, reaching $90.71 per transaction, from $90.68 in the previous year. Despite these positive financial metrics, Home Depot faces challenges within a skittish housing market, which has continued to affect larger renovation projects. Many homeowners are delaying significant investments due to rising borrowing costs and ongoing concerns about inflation. The U.S. housing market has been struggling since 2022 when mortgage rates began to increase from their pandemic-era lows. The existing home sales dropped 5.9% in March from February, marking the slowest pace for the month of March since 2009. This decline signifies a persistent sales slump that has seen previously occupied home sales fall to the lowest level in nearly 30 years. Analysts note that though Home Depot posted strong earnings, the lack of recovery in the housing market poses a significant hurdle for future home improvement spending. The managing director of GlobalData, Neil Saunders, commented on how high-interest rates and economic uncertainty deter consumers from engaging in home purchases, directly impacting all home-related spending. The absence of recovery in the housing market presents continued difficulties for companies operating in this sector, highlighting the need for adaptive strategies in response to fluctuating economic conditions. Home Depot has maintained its sales growth projection at around 2.8%, illustrating confidence in their market position despite the turbulent environment. In summary, while Home Depot reports positive earnings and revenue growth due to strong customer engagement, the company's outlook remains constrained by external factors in the housing market. With the significant decline in home sales, the future of home improvement spending is uncertain, necessitating vigilant management strategies to navigate these economic challenges.