【1】Home Depot is no ordinary retailer¹, but a barometer² for America’s housing market. Comparable sales at the world’s biggest DIY chain fell sharply³ in 2007, before many on Wall Street cottoned on to the coming housing crash⁴. More recently its revenues surged along with the boom that followed the covid-19 pandemic⁵.

【2】Since then Home Depot has again felt the strain¹. Though home prices have held up, the home-buying frenzy²subsequently³ ground to a halt. Annual transactions fell by 20% in 2022 and by 30% in 2023. Mortgage⁴ rates have fallen from their peak in 2023, but sales of existing⁵ homes over the past two years have been the lowest in three decades, according to the National Association of Realtors. Speaking in April, Richard McPhail, Home Depot’s finance chief⁶, put it plainly⁷: “We have never seen housing activity this slow for this long.”

【3】All this means fewer DIY projects. Favourable¹currency² exchange rates boosted³revenue⁴ growth in Home Depot’s latest fiscal⁵ quarter, for which it released results on May 19th. But strip⁶ these out and annual sales in America have been falling or flat for three years. Customer transactions⁷ last year were 9% below a peak⁸ in 2021.

【4】Worse, there is little sign of improvement. Home Depot expects comparable sales to be unchanged in 2026, with a best-case scenario¹ of 2% growth. Its share price has plunged by a quarter from a peak last year. Shoppers still snap up² smaller items like gardening tools and paint. But they are not starting large projects such as kitchen and bathroom renovations—because the housing market is gridlocked³.

【5】Dearer¹ mortgages are partly to blame. Homeowners with pandemic-era fixed² rates of 3% or below are reluctant³ to sell and abandon them, now that the average rate on a new 30-year mortgage has risen to nearly 6.5%. Such rates also put first-time buyers off. More than half of outstanding⁴ mortgages still had rates of 4% or less in the third quarter of 2025.

【6】The more expensive mortgages are, the less buyers can afford¹ to pay for a house. But “sellers are extremely reluctant² to realise losses from their homes,” says Tarun Ramadorai of the London School of Economics. This has also frozen the housing market in Britain, where transactions remain subdued³. In both places, homeowners’ loss-aversion has contributed to prices not moving much. Instead, their unwillingness to sell at a loss has caused sale volumes⁴ to collapse⁵.

【7】Before the Iran war, America’s housing market looked ripe¹ for a recovery. Unemployment was low, existing homeowners were sitting on near-record equity² and affordability³ was improving, in part because of rising incomes. But the closure⁴ of the Strait of Hormuz has sent energy prices rocketing, threatening to drive up inflation⁵ and, in turn, mortgage rates. And so the housing market remains on ice⁶.

【8】What might prompt¹ a thaw²? Some homeowners have little option but to sell up³: those undergoing⁴ divorces⁵, for instance⁶, or moving for work. Home Depot, however, cannot rely on this trickle⁷ of transactions. So it is instead courting⁸ builders, who tend to spend more than the DIY crowd and now account for⁹ half of its revenue. Over the past few years, the firm has spent over $30bn acquiring wholesale¹⁰ distributors¹¹ that cater to¹² professional contractors¹³. But for now, plenty of its tills¹⁴ remain empty—and offer a warning that America’s housing market is broken.