Will 2026 Be the Year the Housing Market Comes Alive? Don't Count on It, Says Home Depot

Key Takeaways

• Homeowners are putting off improvements as they wait for the housing market to exit its years-long slumber, Home Depot executives said Tuesday.
• The housing turnover rate fell to a 30-year low in 2025, according to Redfin, as high mortgage rates and home prices kept both buyers and sellers on the sidelines.

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Homeowners are hunkered down. Home Depot executives don’t expect that to change much anytime soon.

The housing market has been in a deep freeze since 2023. Most homeowners are reluctant to give up the low mortgage rates they secured during the pandemic. Meanwhile, the buying frenzy those rates fueled has put the average home out of reach for many prospective buyers, and affordability has only been made worse by elevated interest rates and persistent inflation that has made it harder to save for a down payment.

That’s hitting the market for homes—but also home-improvement spending. “With turnover down and people still wanting to move, they’re not spending as much in their home if they anticipate moving in the next year or two,” said CEO Edward Decker on Home Depot’s fourth-quarter earnings call Tuesday. As a result, he said, the housing market is stuck “in more of a repair than a replacement cycle."

Why This Is Important

Prospective homebuyers have been waiting years for interest rates or home prices (or both) to drop in order to make a purchase that’s widely seen as the surest way to build wealth. They’ve been thwarted by persistently high inflation, and now an uncertain job market over which the threat of displacement by AI looms large.

Housing turnover, or the rate at which residences change hands, declined to a 30-year low last year, according to Redfin. The turnover rate, which hovered around 4% in the years leading up to the pandemic and spiked to almost 4.5% in 2021, has been stuck below 2.9% for three years.

“I don’t necessarily think that’s going to get any worse,” said Decker of the housing market’s stasis. “But we’re certainly bouncing along with what we hope would be a bottom in things like turnover.”

The homeowner’s focus on repairs over major improvements was visible in Home Depot’s results. Big-ticket transactions, or purchases over $1,000, rose 1.3%, driven by growth in its plumbing, electrical, and power businesses. But “larger discretionary projects” are still under pressure, according to William Bastik, the company’s executive vice president of merchandising, hitting things like appliance sales. Bastik expects that trend to persist this year.

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Turnover could pick up this year if mortgage rates continue to decline. The average 30-year fixed-rate mortgage is down about 1 percentage point since January 2025, according to data from Freddie Mac. Still, it’s above the rate that some economists have said would bring buyers back to the housing market. As of October, most experts were projecting only modest improvements in rates this year.

The outlook didn’t put off investors on Tuesday, with Home Depot (HD) shares up about 2% in afternoon trading. Wall Street will get another perspective on the housing market tomorrow morning when Lowe’s (LOW), Home Depot’s largest competitor, reports its own results.

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