Home Depot Beats Forecasts in Q2 Despite Challenging Housing Conditions

Home Depot has posted a robust second-quarter earnings report, exceeding analysts’ expectations across the board. The company’s customers have shifted their focus to smaller projects, driving growth in various categories.

The Home Depot’s (HD) revenue grew by nearly 6% in the quarter to $47.9 billion, surpassing the $47.3 billion forecast by analysts, according to Bloomberg estimates. Adjusted earnings also grew 0.2% to $4.79, exceeding the predicted $4.73.

Customer Behavior and Market Trends

The company’s CFO, Richard McPhail, attributed the strong demand to customers engaging in smaller projects. ‘We saw broad-based demand across the business as customers continued to engage in smaller projects,’ he stated in the release. McPhail and senior executive vice president Ann-Marie Campbell are temporarily leading the company while CEO Ted Decker takes medical leave.

Despite the positive trend, customers visited Home Depot less frequently during the quarter but spent more when they did. Same-store sales increased 1.7%, outperforming the roughly 1% expected, and US same-store sales jumped 1.3%, higher than the 0.9% forecast.

Key Drivers of Growth

Spring outdoor categories, including live goods, mulch, patio items, and grills, drove momentum. Thirteen out of 16 categories, including electrical, plumbing, and hardwood tools, posted positive same-store sales growth. Ticket sizes of over $1,000 were up 2.4% year over year.

The company received $730 million in tariff refunds, with $685 million reducing its cost of goods sold. This helped offset higher prices for fuel, energy, resin, and metals in the second and third quarters.

Impact on the Housing Market and Lowe’s

Larger discretionary projects are still under pressure due to the record-low housing turnover over the past four years. McPhail pointed out that the team expects the housing conditions to remain ‘frozen’ as 30-year fixed mortgage rates remain around 6.7%. ‘I don’t think that we’ve seen much volatility from the recent increase in rates,’ he told investors on the call. ‘We do know that when we see step-downs [in rates], we began to see a little bit of life come into housing, but there’s just no sign of an inflection point at this moment.’

The company reiterated its 2026 forecast, expecting total sales to grow between 2.5% to 4.5% for the year, with same-store sales growth expected to be flat to up 2%.

Competitive Landscape and Implications

D.A. Davidson analyst Michael Baker said these results set a ‘higher bar’ for Lowe’s (LOW), which is expected to post a same-store sales increase of 0.7% when it reports quarterly results on Wednesday.