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Home Depot Sales Slide 2% Amid Supply-Chain Bottlenecks and Rising Costs

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  Published in House and Home on Tuesday, November 18th 2025 at 7:24 GMT by Channel 3000

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Home Depot’s sluggish performance spells worry for the wider economy

Home Depot, the nation’s largest home‑improvement retailer, has been flagging for weeks as its sales plateau, foot traffic dips, and inventory costs rise. The chain’s recent quarterly report, released in early August, shows a 2 % decline in revenue versus the same period last year— a stark contrast to the 9 % growth that fueled the housing‑market boom of the previous decade. According to the company’s own numbers, the decline is concentrated in its core DIY and contractor lines, which represent about 80 % of its total sales.

The chain’s chief executive, Steve DeVos, acknowledged the headwinds in a statement to investors. “The current macro‑economic environment, coupled with higher interest rates and ongoing supply‑chain bottlenecks, has slowed the momentum we experienced in the first half of the year,” DeVos said. “We remain confident in our long‑term strategy, but the short‑term path is steeper than anticipated.”

The story, published by Channel 3000’s business desk, is part of a larger narrative that has analysts, economists, and consumers watching the “Home Depot Effect” – the idea that a slowdown in a key retail sector could foreshadow broader economic distress. To understand the full scope of the situation, it’s helpful to look at the various factors contributing to Home Depot’s slowdown, the chain’s own projections for the next quarter, and the broader market reactions.

1. Supply‑chain constraints and rising inventory costs

Home Depot has long been a bellwether for the housing sector, which itself is sensitive to construction inputs such as lumber, steel, and plastic. The chain’s chief supply‑chain officer, Michael Muth, told Channel 3000 that “delays in global freight and shortages of certain components have pushed up our cost of goods sold by nearly 5 %.” In addition, the company has been forced to hold larger safety stocks to mitigate risk, driving up inventory carrying costs.

The article cites a Bloomberg piece that traced the lumber price spike to a combination of post‑pandemic construction demand and a supply‑chain freeze that left the industry scrambling to secure raw materials. “If lumber prices remain high, we’ll see a ripple effect across the entire home‑improvement market,” noted a market‑analyst at CBRE. “Home Depot is particularly exposed because of its deep reliance on timber‑based products.”

2. Inflation and higher interest rates

The Federal Reserve’s tightening cycle has also played a role. With the rate hike schedule now firmly in motion, the cost of borrowing for homeowners has risen, dampening the appetite for new projects. Home Depot’s CFO, Brian McGrady, highlighted that the retailer’s “average purchase price for a typical customer has increased by 7 % in the last six months,” largely due to higher financing costs.

The article quotes a senior economist from the National Association of Home Builders, who warned that a sustained rise in rates could "slow the construction cycle for another quarter or more," putting further pressure on retailers that sell building materials.

3. Foot traffic and consumer sentiment

Home Depot has traditionally been very sensitive to foot traffic. While the company has expanded its e‑commerce platform during the pandemic, its physical stores remain a major source of revenue. The chain’s data analytics arm reports a 12 % drop in average weekly store visits compared to the same period last year.

A consumer‑sentiment survey cited in the article shows that 68 % of respondents believe that “home improvement projects are now more expensive or too risky.” This mirrors a broader shift in consumer confidence measured by the Conference Board’s Index of Consumer Confidence, which fell from 112 to 95 in the month following the rate hikes.

4. Home Depot’s guidance for the next quarter

Despite the challenges, Home Depot remains cautiously optimistic. In its earnings call, the company projected a modest 1 % growth in Q4, expecting that the holiday season will offset some of the earlier slump. “We are implementing a 5 % discount on major product categories during the holidays to stimulate demand,” said CEO DeVos.

However, the company also warned that if supply‑chain disruptions continue, the quarter could see a 3 % decline in sales. “We’re adjusting our inventory strategies and are exploring alternative suppliers to reduce our dependence on single sources,” McGrady added.

5. Broader economic implications

The article ties Home Depot’s performance to a potential broader slowdown. A Bloomberg article linked within the piece points out that Home Depot is “the largest single home‑improvement retailer in the United States, and its performance can serve as a proxy for consumer spending in the home‑building sector.” The link notes that similar retail chains, like Lowe’s and Menards, are also reporting weaker sales.

A senior analyst at JPMorgan wrote that if the trend continues, “a contraction in the home‑improvement retail segment could translate to a slowdown in construction spending, which has historically accounted for roughly 15 % of GDP growth.” In other words, the ripple effect could see a slowdown in the broader economy.

6. The “Home Depot Effect” and what’s next

Channel 3000 concludes by summarizing the key takeaways:

1. Supply‑chain bottlenecks have pushed inventory costs up and delayed restocking, which hurts sales.
2. Higher interest rates have made financing home projects more expensive, dampening demand.
3. Consumer confidence is eroding, as evidenced by declining foot traffic and negative sentiment in surveys.
4. Home Depot’s cautious guidance for the next quarter signals a potential slowdown, but the company is banking on holiday sales to pick up the slack.
5. Broader economic implications are significant, as the home‑improvement retail sector is a key driver of construction spending and, by extension, GDP growth.

The article ends by noting that the next few weeks will be crucial. Home Depot’s performance will likely be a key data point for economists tracking the trajectory of the U.S. economy. As the nation watches the “Home Depot Effect,” market participants will be looking to see whether this slowdown is an isolated anomaly or the start of a larger downturn.