Home Depot has struggled this year as higher prices and a downbeat housing market have crimped customer demand.

Inflation has rebounded in the wake of tariffs, with the Consumer Price Index inflation rate reaching 3% in September, up from 2.3% in April, before most tariffs took effect. The effective tariff rate has climbed to 18% from 2.4% this year, according to Yale Budget Lab.

Homeowners and potential buyers are also facing stubbornly high interest rates that are slowing home sales and increasing the cost of projects, such as additions or kitchen and bathroom upgrades.

Mortgage rates remain above 6%, despite the Federal Reserve’s interest rate cuts in October and November, while HELOC rates average 7.8%, according to Bankrate.

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

Home Depot’s second-quarter results reflect the ongoing headwinds. Sales at stores open for at least one year inched only 1% higher, primarily due to higher prices rather than an increase in shoppers. Visits to Home Depot locations sagged 2.6% during the quarter, according to Placer.ai.

On Nov. 18, Home Depot will release its third-quarter update on customer behavior. Wall Street thinks trends improved, but not by much.

Home Depot recently suffered declining foot traffic in its stores.

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Bank of America shares Home Depot third-quarter predictions

On Nov. 13, Bank of America weighed in on what Home Depot will likely tell investors about its third-quarter performance. In a letter to customers shared with TheStreet, the bank’s analysts predicted “modest” shifts in customer trends.

A 0.3% improvement in comparable store sales isn’t overly impressive, though, and price will likely account for most of the upside. Bank of America’s analysts point out that Bloomberg’s observed credit and debit card data show transactions fell 1.1% in the third quarter, even as average transaction amounts increased 2.8%.

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Using Bank of America’s cardholders as a proxy for do-it-yourself demand, spending declined 3.5% year over year in the third quarter, worse than the 2.9% drop in Q2.

While Home Depot sources about 50% of its products in the U.S., that still leaves a substantial number of items on store shelves that are more expensive due to tariffs.

Bank of America estimates that Home Depot would need to increase prices by 4.4% to offset the cost increases resulting from tariffs entirely.

The analysts believe that “modest price increases to offset tariffs” will lead to Home Depot’s guidance for the second half of this year being slightly better than for the first half.

Overall, the analysts expect Home Depot to report sales of $40.9 billion and earnings per share, or EPS, of $3.82.

Home Depot bets big on pro business

While do-it-yourself shoppers weigh down Home Depot’s overall performance, it is making a bigger push into the pro supply chain that could help offset some of the weakness it’s seeing in its stores.

Related: Home Depot faces growing consumer boycott calls ahead of holidays

Home Depot recently closed on its $5.5 billion acquisition of GMS, which adds a major distributor of building products, including drywall, ceilings, steel framing, and other related products, to its business mix.

That deal follows in the footsteps of Home Depot’s $18.25 billion acquisition of building material supplier SRS Distribution, expanding its reach to landscaping, roofing, and pool construction professional contractors.

Bank of America predicts that SRS organic sales growth will likely remain in the mid-single digits through 2025.

Home Depot’s acquisitions aren’t the only moves being made to increase business from professionals. It’s also rolling out trade credit for pros in more locations, allowing for more flexible payment terms, such as net 30 or net 60 days.

Home Depot guidance is key

While the third-quarter sales figures may be marginally better than those of the second quarter, what management says about the fourth quarter and next year will be particularly important.

Early evidence suggests that October got the quarter off to a slow start, with spending falling sharply. According to another Bank of America report from its Data Insight team shared with TheStreet, “building products spending slowed YoY vs. September with 5 out of 9 categories declining YoY.”

Home improvement spending growth (year-over-year) by month:

  • October: -5%
  • September: -1%
  • August: -5%
  • July: -1%
  • June: -3%
  • May: -4%
  • April: -2%
    Source: Bank of America Data Insights on cardholders/TheStreet.com

Overall, the analysis showed that home improvement spending sank 5% from one year ago in October —the worst showing since August. Lumber stores were particularly hard hit. Sales at lumber stores fell 8% from one year ago following the September announcement of higher lumber tariffs.

Related: Home Depot spots shift in customer behavior