Home improvement company reports strong fourth-quarter results, despite consumers being cautious about large investments.
Home Depot’s chief financial officer, Richard McPhail, says people are “moving on” from high mortgage rates and investing more in their homes. The company reported a 14.1% year-over-year increase in sales for the fourth quarter of fiscal 2024, exceeding expectations. However, customers remain conservative about making large investments like kitchen remodels.
Experts note that current mortgage rates, hovering around 6%, may become the new normal as they are compared to historic rates. The pandemic-era low mortgage rates, which fueled home buying, were an anomaly. Mortgage rates have stabilized in higher ranges throughout history, and economists point out that today’s housing market is more comparable to past trends.
Home improvement has remained a popular hobby during the pandemic, but homeowners have returned to renovating and upgrading their homes. The Joint Center for Housing Studies of Harvard University reports that spending on home improvements and repairs grew over 3% in 2020 to almost $420 billion.
“We saw greater engagement in home improvement spend,” said Home Depot CEO Ted Decker. However, customers are cautious about investing in expensive projects like remodeling a kitchen or installing new flooring. Experts agree that the mindset of whether long-term rates have become normal will be crucial in determining consumer behavior.
Source: https://fortune.com/2025/02/25/home-depot-high-mortgage-rates-new-normal-housing-richard-mcphail-ted-decker