Home Depot Says High Interest Rates Preventing Consumers from Renovations Projects

Consumers are delaying major home improvement projects as high interest rates and economic uncertainty weigh on household budgets. Home Depot executives say these factors are putting pressure on large-scale renovations.

Key Facts:

Home Depot CEO Ted Decker reported a slowdown in large remodeling projects due to economic uncertainty and high interest rates.
Executive VP Billy Bastek noted that customers are relying more on flexible financing for renovations like kitchen and bath remodels.
Sales to Home Depot’s professional customers outpaced do-it-yourself (DIY) customers in the fourth quarter.
Mortgage rates remain near 7%, discouraging home sales and limiting housing market activity.
The National Association of Home Builders reported a decline in builder confidence, citing concerns over tariffs and housing market conditions.

The Rest of The Story:

Home Depot executives revealed during their earnings call that homeowners are pulling back on big renovation projects.

High borrowing costs are a major factor, as many customers typically rely on financing for extensive remodels.

Instead, the company has seen more engagement in smaller-scale home improvement projects.

At the same time, housing market activity remains sluggish.

Many homeowners who secured ultra-low mortgage rates during the pandemic are reluctant to sell, limiting inventory and keeping home prices high.

With mortgage rates hovering around 7%, many prospective buyers are struggling with affordability, leading to fewer pending home sales.

Additionally, concerns over tariffs on building materials have dampened confidence among homebuilders, with projections for future sales taking a hit.

Commentary:

Americans are firmly in “wait and see” mode, delaying major financial decisions amid rising costs and economic uncertainty.

The latest consumer confidence report showed a sharp decline, reflecting worries over inflation, high interest rates, and job stability.

⚠️BREAKING:

*U.S. FEBRUARY CB CONSUMER CONFIDENCE FALLS TO 98.3; EST. 102.7; PREV. 105.3

*LOWEST SINCE APRIL 2024

🇺🇸 🇺🇸 pic.twitter.com/41OQ5fB1og

— Investing.com (@Investingcom) February 25, 2025

These concerns extend to home improvement, where homeowners are hesitant to take on big renovation projects.

Mortgage rates remain a major roadblock.

With millions of homeowners locked into historically low rates, fewer people are moving, further disrupting the housing market.

That means fewer home sales, less turnover, and ultimately, less demand for large-scale remodeling projects.

Meanwhile, inflation continues to erode household budgets.

Essentials like groceries, utilities, and insurance have all gone up, leaving little room for discretionary spending.

It’s no surprise that expensive renovations are taking a backseat.

Adding to the uncertainty is the federal government’s economic policy.

Job cuts, shifting trade policies, and potential tariffs on construction materials could drive costs even higher.

This creates further hesitation for both consumers and homebuilders alike.

For now, homeowners seem willing to tackle smaller projects but are holding off on major renovations until the economic picture becomes clearer.

The Bottom Line:

Rising interest rates, high home prices, and economic uncertainty are forcing homeowners to rethink their renovation plans.

Home Depot is seeing fewer large-scale remodeling projects as consumers tighten their budgets.

With mortgage rates still high and economic concerns mounting, the slowdown in home improvement spending is unlikely to reverse anytime soon.