Home Depot struggles to reverse a concerning customer trend

Home Depot has been doubling down on efforts to boost consumer demand in its stores amid ongoing challenges in home improvement retail.

In recent months, it has focused on using technology to reduce friction and simplify the customer experience as it navigates headwinds in parts of its business. However, Home Depot executives are pointing to a customer trend that continues to pressure sales growth.

Home Depot’s comparable sales in the U.S. increased by only 0.4% year over year in the first quarter of 2026, according to its most recent earnings report. This sales growth slightly missed Wall Street analyst expectations.

In addition, its operating income during the quarter declined by 3%, compared to the same time period in 2025.

Also, recent data from Placer.ai showed that customer visits to Home Depot stores increased by almost 1.9% year over year during the quarter. This growth fell slightly behind Lowe’s, its top competitor, which saw foot traffic spike by 2%.

Home Depot recently rolled out major changes for customers

Home Depot’s weak sales growth during the quarter follows its price increases in stores last year due to tariffs.

It also comes after the retailer launched several new digital tools to win back customers. In January, Home Depot expanded its partnership with Google Cloud to develop artificial intelligence tools to assist customers and associates with project completion tasks.

The retailer later introduced Material List Builder AI, an AI-powered digital tool that allows its pro customers (residential and commercial professional contractors) to create project material lists within minutes.

In March, Home Depot announced a new real-time delivery tracker for big and bulky orders, which was launched by the end of the first quarter. The feature provides pro customers with minute-by-minute updates on their orders.

Last month, it even rolled out a customer service AI voice agent phone system in its U.S. stores to provide faster support for customer calls.

Home Depot executives flag where customers are spending their dollars

During an earnings call on May 19, Home Depot Chief Financial Officer Richard McPhail revealed that the company’s comparable sales in the U.S. were positive in February and March, but slightly decreased by 0.8% year over year in April.

William Bastek, Home Depot executive vice president of merchandising, said during the call that sales from the company’s Pro customers “outperformed” those from DIY shoppers.

“For Pro, we saw strength across many Pro-heavy categories like power, pipe and fittings, water heaters, fasteners and paint,” he said. “The investments we are making are resonating with our Pros as we see increased engagement.”

Home Depot CEO Ted Decker said that the company is focused on winning over more Pro customers as this strategy taps into a billion-dollar market.

“So we think Pro is an enormous opportunity for us,” said Decker. “As we’ve said, it’s an addressable market of about $700 billion.”

Home Depot CEO says customers continue to pull back

He also said that the consumer has been “remarkably resilient” during the quarter despite economic headwinds.

“Wage growth has been reasonably strong,” he said. “And you look at our core customer, they’re probably amongst the healthiest of all consumers. So they tend to own their homes. They did have that 50% value pop in the value of their homes over the past several years. And their portfolios of equities have also improved.”

However, shoppers are still pulling back on tackling large home improvement projects as the housing market continues to face challenges.

Related: Home Depot cuts back key employee benefit amid customer struggles

“The main thing is just this uncertainty that’s holding them back for taking on large projects,” said Decker. “And then you add to that with the higher rates, housing turnovers remain low, industry is not expecting a lot of growth in housing turnover this year, and new construction starts in sales are also trending down.”

Many consumers have been navigating higher interest rates in the U.S. housing market, which has slowed down housing turnover in recent years.

While mortgage rates have improved this year compared to last year, they have increased in recent months, according to data from the National Association of Realtors.

U.S. housing market performance in April 2026:

• In April, the average 30-year fixed-rate mortgage was 6.33%, up from 6.18% in March and 6.05% in February.

• The median existing-home sales price climbed to $417,700, up 0.9% year over year.

• Existing-home sales increased by 0.2% month over month and were flat year over year.

• Month-over-month U.S. home sales increased by 2.2% in the Midwest and 0.5% in the South. However, sales remained flat in the Northeast and decreased by 2.6% in the West.
  Sources: National Association of Realtors, Freddie Mac

In a press release, Lawrence Yun, National Association of Realtors chief economist, said that home sales were “modestly boosted by the continued improvement in housing affordability,” despite economic uncertainty.

“Mortgage rates are lower from a year ago, and average income growth is outpacing home price gains,” said Yun.

“Inventory still remains tight,” he added. “Multiple offers, though not as intense as a few years ago, are still occurring. At the same time, days on market are lengthening on average, implying that consumers are taking their time before making decisions.”

Cerv Property Solutions CEO Kade Thomas said in a statement to TheStreet that Home Depot’s performance during the first quarter signals that consumers are tackling smaller, more essential home improvement projects as they wait for the housing market to improve.

“What we’re seeing on the ground is that ‘deferred maintenance’ is hitting a tipping point,” said Thomas. “Because we’re still waiting to see a full thaw across the housing market, property owners are understandably holding off on massive, discretionary remodeling projects.”

“Instead, they are redirecting budgets toward non-discretionary infrastructure care: consistent, essential maintenance that protects a property’s current value rather than trying to dramatically increase it,” he continued.

Home Depot shares a cautious outlook on future sales

Amid this shift in customer behavior, Home Depot is expecting its comparable sales growth this year to either remain flat or increase by 2%.

“The environment is different than it was three months ago, probably a more volatile external environment to a degree,” said McPhail during the earnings call. “But really kind of unclear on how that will all shape out for the year.”

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He said that the environment is “changing almost every day,” and there are “potential cost pressures” from rising fuel prices, new tariffs, etc.

Despite this reality, McPhail highlighted that Home Depot is “positioned to manage through the rest of the year,” despite economic headwinds.

“We will continue, just like we did last year, to manage cost and price, to maintain our position as the customer’s advocate for value as we move through the year,” he said.

Related: Target sees unexpected shift in customer behavior

This story was originally published by TheStreet on May 23, 2026, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.