Home Depot Faces Weak DIY Demand: Should Investors be Concerned?

The Home Depot Inc.’s HD do-it-yourself (“DIY”) business remains under pressure as cautious consumers continue to defer larger discretionary home-improvement projects. In the second quarter of fiscal 2026, management noted that Pro customers posted positive comps and outperformed DIY, underscoring the relative softness among DIY shoppers. While DIY demand was healthy across several spring-related categories, including live goods, mulch, soils, hardscapes, storage, patio and grills, larger discretionary projects remained challenged.

The weakness largely reflects an unfavorable housing and consumer backdrop. Management highlighted continued consumer uncertainty and housing affordability pressures, which are weighing on the demand for bigger home-improvement projects. Housing turnover also remains near historically low levels, with management noting no clear sign of an inflection point despite some improvement when interest rates ease.

However, the situation does not appear alarming. Customers continue to engage in smaller repair and maintenance projects, while 13 of Home Depot’s 16 merchandising departments generated positive comps during the quarter. Big-ticket transactions above $1,000 also rose 2.4% year over year, although broader discretionary projects stayed pressured.

Home Depot continues to gain traction through stronger digital engagement, faster delivery and improving in-store execution. Online sales advanced 11% in the quarter, marking the fifth consecutive quarter of double-digit growth. With management reaffirming its fiscal 2026 comparable-sales guidance of flat to 2% growth, weak DIY demand remains a near-term headwind, but broad category strength and continued market-share gains provide some offset.

How Are Peers Like LOW & WSM Catching Up?

Peers such as Lowe’s Companies Inc. LOW and Williams-Sonoma Inc. WSM are intensifying competition through targeted investments in digital capabilities, customer engagement and differentiated product offerings.

Lowe’s continues to face soft DIY demand as cautious homeowners limit discretionary spending amid elevated rates, inflation, fuel costs and broader economic uncertainty. Management noted that customers are prioritizing repair and maintenance projects over larger remodeling jobs, pressuring transactions. Still, the weakness appears manageable, with Pro, Online and Home Services providing offsets, while five consecutive quarters of positive comps and expectations for eventual housing recovery support confidence in longer-term demand.

Williams-Sonoma continues to navigate a pressured housing backdrop and macro uncertainty, factors that can weigh on discretionary home-furnishings demand. Yet, current results suggest limited cause for concern. Second-quarter fiscal 2026 comparable brand revenues rose 6.2%, with every brand delivering growth, while management said that it gained market share and outperformed the industry. The company also raised its fiscal 2026 outlook, signaling confidence that strong execution can offset softer housing-related demand trends.

HD’s Price Performance, Valuation & Estimates

Shares of Home Depot have lost 19.3% in the past year versus the industry’s decline of 24.9%.

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From a valuation standpoint, HD trades at a forward price-to-earnings ratio of 21X compared with the industry’s average of 19.17X.

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The Zacks Consensus Estimate for HD’s fiscal 2026 and fiscal 2027 earnings per share (EPS) implies year-over-year growth of 2.1% and 7%, respectively. The company’s EPS estimate for fiscal 2026 has moved up by a penny in the past seven days. Meanwhile, the consensus estimate for fiscal 2027 EPS has moved down 0.1% in the past seven days.

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Home Depot stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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