Home Depot and Lowe's Battle Over the Housing Market's Maintenance Economy

High mortgage rates are killing big renovations while pushing dollars toward the smaller repairs and maintenance homeowners can’t postpone. Home Depot said contractor demand outpaced DIY, while $1,000-plus transactions rose 2.4%, suggesting the valuable customer in this cycle is the professional builder. With discretionary DIY still soft, both chains are competing for more of the recurring, less-deferrable spending required to maintain America’s aging housing stock.

Second quarter results from Home Depot and Lowe’s offer perhaps the clearest evidence yet of how a prolonged period of elevated mortgage rates is changing where money flows inside the roughly $1 trillion U.S. home-improvement economy.

Homeowners who are reluctant to move are also reluctant to finance expensive renovations. At the same time, houses continue to age, and contractors still have jobs to finish. Home Depot on Tuesday (Aug. 18) reported second-quarter sales of $47.86 billion, up 5.7% from a year earlier, with adjusted earnings of $4.92 per share. Comparable sales rose 1.7%, and the company maintained its full-year outlook. On Wednesday (Aug. 19), Lowe’s reported $25.96 billion in sales, up more than 8% but below expectations, while comparable sales increased just 0.2%. Adjusted earnings of $4.40 beat expectations, helped partly by tariff refunds, but Lowe’s moved its full-year outlook to the bottom of its previous range.

The divergence says less about two retailers selling similar products than about the customers each has spent years positioning itself to serve.

The American housing market does not need to collapse to reshape the home-improvement business. It merely needs to stop moving. Housing turnover has historically been an unusually powerful catalyst for home-improvement spending. Buying or selling a house can trigger a cascade of projects: new flooring, remodeled kitchens, fresh paint, upgraded bathrooms and other discretionary improvements. That engine is sputtering. High mortgage rates have created a lock-in effect for homeowners sitting on substantially cheaper loans, suppressing transactions and, with them, many of the large renovation projects that accompany a move. Home Depot CFO Richard McPhail described the backdrop as “frozen” housing-market conditions. Yet the company is still seeing broad demand for smaller projects. Home Depot said smaller projects increased while larger projects declined during the quarter, underscoring how spending is migrating toward maintenance demands that are harder to defer. After all, a kitchen remodel can wait. A failed water heater can’t. Contractors serve a wider range of spending occasions, including repairs, maintenance, commercial work and projects already under contract. That creates a different demand profile from the discretionary DIY customer deciding whether new cabinets or a patio renovation can wait another year. Home Depot has spent years building a business designed to capture more spending from professional contractors, including its roughly $18 billion acquisition of SRS Distribution in 2024 and subsequent investments in fulfillment, delivery and complex-project capabilities. According to the company’s earnings, professional customers outperformed DIY customers during the...