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Mortgage rates affect Home Depot chiefly through housing affordability and the number of homes changing hands. Higher borrowing costs can discourage purchases and moves, reducing the repairs, renovations and other projects that often accompany a home transaction. They can also make large discretionary projects harder to finance. Home Depot’s management has described this channel directly, while warning that rates are only one of several forces shaping results.
The operating link is more supportable than any claim that a particular rate move caused a particular move in Home Depot (NYSE: HD) shares. Sales, earnings, storms, weather, consumer confidence, project mix, the fiscal calendar and investors’ expectations all matter. The company’s disclosures explain the mechanism but do not provide a standalone mortgage-rate sensitivity for revenue or stock returns.
How mortgage rates reach Home Depot’s business
Mortgage rates influence Home Depot through two connected decisions: whether a household buys or sells a home, and how much that household spends on projects.
Affordability changes the decision to move
A higher mortgage rate raises the payment required to finance a given home price. It can also make an existing low-rate mortgage valuable to keep, even when a household would otherwise move. Fewer purchases and sales mean fewer customers undertaking the work commonly associated with a transaction: repairs before listing, materials for a new home, installation projects, paint, flooring, appliances and other “move-in” or “move-out” spending.
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Home Depot chief financial officer Richard McPhail described this effect on the company’s fourth-quarter fiscal 2025 call. He said the current mortgage-rate environment and the substantial rise in home prices since 2019 had reduced housing affordability. He also said housing turnover had remained at historical lows since 2023, significantly reducing demand for projects and other purchases associated with buying and selling a home. The full transcript is available in Home Depot’s Q4 fiscal 2025 earnings-call transcript.
Project financing becomes harder
Mortgage rates do not affect only movers. Large projects may be funded with home-equity borrowing, cash that would otherwise be used for a renovation, or a general household budget that is sensitive to monthly debt payments. When financing costs rise, a customer may postpone a kitchen, bath, deck or whole-home project, reduce its scope, or choose lower-cost materials.
That does not mean every homeowner stops spending. Essential repairs, maintenance and smaller upgrades can continue, and some households have sufficient cash to proceed. Home Depot reported fiscal 2026 second-quarter sales of $47.9 billion, up 5.7% year over year, while management said customers continued to engage in smaller projects. The filing containing those results is available from the SEC.
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Why housing turnover matters more than a simple “rates up, sales down” rule
Home-improvement demand is a mixture of transaction-related and ongoing spending. A home sale can trigger several purchases in a short period, whereas a household that stays put may spread maintenance over time. This makes turnover an important variable for a retailer whose products serve both professional tradespeople and do-it-yourself customers.
- Move-related demand: repairs to make a property marketable, replacements requested during a sale, and projects undertaken soon after a purchase.
- Existing-home maintenance: plumbing, electrical, seasonal upkeep and repairs that owners cannot defer indefinitely.
- Discretionary renovation: larger kitchens, bathrooms, outdoor living areas and other projects that are easier to postpone when financing is expensive.
- Professional activity: contractor demand tied to remodeling and repair backlogs, which can respond to housing activity, labor conditions and project economics.
Because these categories respond differently, a high-rate period can weaken large, financed projects and transaction spending without eliminating all store traffic. Conversely, a rate decline may improve affordability and turnover gradually rather than produce an immediate sales surge; customers and builders still need time to list, buy, schedule and complete work.
What Home Depot’s fiscal 2025 results actually show
Home Depot’s fiscal 2025 results show modest top-line growth alongside lower profit. They do not isolate the contribution of mortgage rates. The company’s February 24, 2026 results release and its 2026 proxy statement report the following:
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| Measure | Fiscal 2025 result | Change or qualification |
|---|---|---|
| Net sales | $164.7 billion | Up 3.2% from fiscal 2024 |
| Comparable sales | 0.3% growth | Companywide comparable-sales change |
| U.S. comparable sales | 0.5% growth | U.S. comparable-sales change |
| Net earnings | $14.2 billion | Down 4.4% from fiscal 2024 |
| Fiscal-year length | 52 weeks | Fiscal 2024 had 53 weeks |
The extra week in fiscal 2024 contributed approximately $2.5 billion of sales, according to the proxy statement. Raw year-over-year sales therefore overstate the underlying comparison unless the periods are normalized. A 3.2% reported increase does not prove that high mortgage rates were harmless, just as a weak comparable-sales figure would not prove that rates were the sole cause.
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Management’s description is explicit but broad. The proxy says a persisting high-interest-rate environment continued to pressure broader home-improvement demand. On the fiscal 2025 fourth-quarter call, chief executive Ted Decker said results reflected ongoing consumer uncertainty and pressure in housing; he added that, after adjusting for storms, underlying demand was relatively stable through the year. That is management’s characterization, not a statistical estimate of the mortgage-rate effect.
Mortgage-rate context: what the company’s figures do and do not mean
Home Depot’s December 2025 investor-conference materials said more than 70% of outstanding mortgages were below 5% and showed a 4.3% average effective mortgage rate. Those figures are dated company presentation context, not a current mortgage-rate quotation or a measure of Home Depot’s sales sensitivity. They help explain why existing homeowners may be reluctant to replace an older, cheaper loan when moving would require a much higher rate. See the investor-conference presentation for the company’s definitions and date.
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Do not substitute Federal Reserve mortgage-balance-sheet data for a mortgage-rate series. The Federal Reserve’s Z.1 Financial Accounts release, dated September 11, 2026, contains mortgage-related financial-account flows through 2026:Q2, but those flows are not observations of mortgage interest rates and do not measure Home Depot demand.
Home Depot’s fiscal 2026 outlook
For fiscal 2026, Home Depot guided to total sales growth of approximately 2.5% to 4.5%, comparable-sales growth from roughly flat to 2.0%, and diluted earnings-per-share growth of roughly flat to 4.0% from fiscal 2025. These are company forecasts, not promises and not a quantified mortgage-rate model.
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|---|---|---|
| Total sales growth | Approximately 2.5%–4.5% | Reported-sales outlook |
| Comparable-sales growth | Roughly 0%–2.0% | Underlying store-sales outlook before the effects of new or closed stores |
| Diluted EPS growth | Roughly 0%–4.0% | Profit outlook, subject to operating and financial factors |
To assess whether housing is improving, pair the guidance with transaction indicators, customer transactions, average ticket, professional-customer trends and commentary on large versus small projects. A sales increase driven by smaller maintenance jobs would represent a different rate environment outcome from a recovery in large, financed renovations.
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Do higher mortgage rates hurt Home Depot stock?
They can affect the investment case, but the direction and size of any share-price response cannot be inferred from operating commentary alone. A rate increase may lower expected housing turnover, reduce projected project demand or raise investors’ required return for equities. A rate decline may improve expectations for housing activity. At the same time, markets price anticipated changes before they appear in reported sales, and HD shares respond to earnings, valuation, dividends, storms, retail competition, execution and broad market conditions.
The reviewed company sources do not calculate a mortgage-rate beta for HD, identify a specific rate move as the cause of a specific share-price move, or provide a controlled comparison of returns. Home Depot’s historical stock lookup can provide prices for a defined analysis, but the calculation remains the analyst’s responsibility.
A disciplined way to analyze HD and mortgage rates
- Define the dates. State the exact start and end dates, and whether the period is a day, quarter, fiscal year or a longer cycle.
- Choose the rate measure. Use a dedicated mortgage-rate series and identify its geography, frequency and methodology. Do not treat mortgage balances or Federal Reserve financial-account flows as rate observations.
- Calculate total return. Include dividends when comparing an investor’s experience; price change alone is a different measure.
- Use a benchmark. Compare HD with an appropriate broad-market or retail benchmark over the same dates.
- Align fundamentals. Check comparable sales, transactions, average ticket, margins, earnings and guidance for the matching fiscal periods.
- Separate correlation from causation. If HD and mortgage rates move together, consider other simultaneous factors before assigning the move to rates.
This framework distinguishes three different statements: rates may influence the business mechanism; company results may confirm or contradict the expected operating effect; and the stock may anticipate, amplify or ignore that information.
Scenario guide for readers and investors
| Housing and rate setting | Likely Home Depot pattern | Evidence to monitor |
|---|---|---|
| Rates fall and affordability improves | Turnover and move-related projects could recover, but the response may lag the rate change. | Existing-home transactions, project commentary, comparable sales and professional demand |
| Rates remain high and turnover stays depressed | Large discretionary and transaction-related projects may remain constrained while maintenance and smaller projects provide support. | Housing turnover, average ticket, project mix and management comments on financing |
| Rates are stable but consumers remain uncertain | Demand can remain uneven even without a new rate shock. | Consumer confidence, credit conditions, transactions and guidance revisions |
| Storm activity or unusual weather changes | Repair and rebuilding demand can overwhelm or mask the housing-rate signal in a quarter. | Storm timing, regional sales and the company’s adjusted commentary |
These are analytical scenarios, not forecasts. Home Depot’s own fiscal 2025 comments show why: the company cited storms, consumer uncertainty and housing pressure together, and said underlying demand was relatively stable after adjusting for storms.
Common interpretation mistakes
- Using reported sales without the calendar adjustment: fiscal 2024’s 53rd week added about $2.5 billion, so fiscal 2025 comparisons should be read with that difference in mind.
- Calling every renovation a mortgage-rate effect: maintenance, storm repairs, weather and project urgency can produce demand even when turnover is low.
- Assuming a rate cut guarantees an immediate sales rebound: affordability, inventory, home prices, labor availability and customer confidence also determine whether projects start.
- Equating sales with earnings: fiscal 2025 sales rose 3.2%, while net earnings fell 4.4%; costs, mix and other operating factors matter.
- Inferring stock causation from a chart: a simultaneous movement in rates and HD is not evidence that one caused the other.
- Quoting a dated mortgage statistic as current: the 4.3% effective rate and “more than 70% below 5%” figure came from December 2025 company materials and should be labeled accordingly.
Bottom line
Mortgage rates matter to Home Depot because they influence housing affordability, the incentive to move and the financing of large projects. Low turnover since 2023 has reduced purchases associated with buying and selling homes, according to management, while smaller maintenance projects can continue. Fiscal 2025’s $164.7 billion in sales and 0.3% comparable-sales growth provide context, not a rate-only verdict; the 53-week fiscal 2024 comparison and the decline in net earnings require care.
For HD shares, treat mortgage rates as one input to expectations rather than a standalone trading signal. A credible performance claim needs defined dates, a stated mortgage-rate series, total-return treatment, a benchmark and a review of competing drivers. The available disclosures support a plausible operating connection, but they do not establish an isolated causal effect of mortgage rates on Home Depot’s sales or stock returns.
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