There’s something about walking Home Depot’s aisles that’s relaxing. It’s hard to put my finger on it, but perhaps it’s rooted in a general sense of purpose — things need to get done, and this is where you go to help do them.

The feeling of accomplishment from building, fixing, or improving your home is not only emotionally rewarding but good for your wallet. Upgrading to fiber cement siding, swapping in a new garage door, and a minor kitchen remodel all increase the value of your home by more than they cost, according to The Journal of Light Construction’s Cost vs. Value 2025 report. Even painting a room can increase your home’s value if you choose the right color (navy blue and olive are among the top colors in 2025, according to Zillow).

Highest ROI home improvement projects (2025)

  • Garage Door Replacement: 268%
  • Entry Door Replacement | Steel: 216%
  • Manufactured Stone Veneer: 208%
  • Siding Replacement | Fiber-Cement: 114%
  • Minor Kitchen Remodel | Midrange: 113%
    Source: The Journal of Light Construction.

Yet, fewer people are visiting home improvement stores, including Home Depot, due to price increases, job losses, and higher interest rates.

In September, the Consumer Price Index showed inflation of 3%, up from 2.3% in April before tariffs were enacted. According to the Yale Budget Lab, the effective tariff rate on imports has risen to 17.9%, the highest since 1934. In January, it was only 2.4%.

“Obviously tariff rates are significantly higher today than they were when we spoke in May. So as you’d expect, there’ll be some modest price movement in some categories,” acknowledged Home Depot Merchandising Executive Vice President Billy Bastick in the company’s second quarter earnings call.

Meanwhile, the U.S. unemployment rate was 4.3% in August — the last month of data available before the shutdown. That’s its highest level since 2021. Customers are facing a cash crunch, and Home Depot is bearing its fair share of the pain.

Housing market wrestles with rates, economy

Home Depot benefited mightily during Covid, when everyone was forced indoors, causing them to take a hard look at necessary improvements. More time at home, the need to repurpose spaces from living spaces to working spaces, rock bottom interest rates on home equity loans, and government stimulus checks all drove people to take on projects.

The Home Depot has seen a decline in foot traffic amid economic uncertainty in 2025.

Image source: Shutterstock

The situation isn’t nearly as good nowadays. Home sales stagnated as prices and mortgage rates have soared since 2022 due to the Federal Reserve raising rates to combat runaway inflation.

Housing statistics (2025):

  • New home sales: 800,000 (Aug. 2025).
  • Existing home sales: 4.06 million (Sept. 2025).
  • Median price of a new home (Aug. 2025): $413,500
  • Median price of an existing home (Sept. 2025): $415,200:
    Source: Census Bureau; National Association of Realtors.

The average HELOC rate, a significant source of funding for large home improvement projects, was below 4% in 2021. Now it’s 7.86%, according to Bankrate data. About 800,000 new single-family homes were sold in August, down from 1 million at the peak of 2021.

“Some people are saying that it’s [the housing market] close to frozen and some of the numbers would suggest with 40-year lows of housing turnover,” said Home Depot CEO Ed Decker at an industry conference in September. “There’s just been a lot of economic uncertainty that we think is preventing people from taking out a HELOC or cash out refi at their home.”

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Given that backdrop, it’s not hard to see why fewer people are walking the aisles of Home Depot or rival Lowe’s, both of which have seen foot traffic and transaction count stagnate or decline.

Home Depot sees shift in customer trends

During Home Depot’s Q2 quarterly conference call in July, it noted challenges, including slower activity in its stores. The retailer saw a slight 1.4% uptick in average year-over-year ticket size, but this was more due to higher prices and a shift in mix than an increase in customers, given that the number of transactions slipped, declining 0.4% from the previous year. Through the first six months of 2025, transaction count at stores open more than a year fell 0.5%. Transactions across all stores, including newly opened Home Depot stores, fell 0.9% in Q2.

Home Depot sources about half of the products it sells in the U.S., but that still means that about half of the products on its shelves come from overseas, making them subject to President Trump’s import taxes. While companies like Home Depot are negotiating with vendors and absorbing some of the cost increases by cutting expenses elsewhere, they have implemented modest price increases in their stores, adding to the strain on consumer wallets.

Through August, sales at “Building Material and Garden Equipment and Supplies Dealers” fell 1.1%, according to the Census Bureau’s retail sales report.

It hasn’t improved yet, despite the Fed’s decision to lower interest rates in September and again in October.

Bank of America crunched spending data from credit card holders and found that in the week ending Oct. 25, spending on home improvement fell 5.4% from one year ago, according to a research report shared with TheStreet.

That’s hardly reassuring, given that overall household spending on the week rose 0.8% from one year ago.

Compounding matters: The White House recently slapped more aggressive tariffs on lumber. On September 30, it announced a 10% global tariff onsoftwood lumber, which took effect on October 14, 2025. Additionally, a 25% tariff on kitchen cabinets and vanities was added, with the rate increasing to 50% on January 1, 2026.

“The US imports bout one-third of the lumber it consumes and about 85% of lumber imports come from Canada,” according to The Conference Board.

Higher prices from tariffs are unlikely to help Home Depot’s foot traffic, but we’ll find out more when Home Depot reports its third-quarter results in mid-November.

Related: Home Depot raises alarm bells with unexpected closure, layoffs