What Is The One Risk Every Home Depot Investor Should Know? Trefis Team Mon, October 12, 2026 at 4:54 PM EDT 4 min read HD -0.04% ^GSPC -0.06% AMZN -1.11% WMT +1.55% COST +1.32% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Shares of Home Depot (HD) have lost 22% over the past twelve months, significantly lagging the 17.0% return of the S&P 500. Total sales are still growing, up 5.7% in the fiscal second quarter. Yet during Home Depot's August 18, 2026 earnings call, executives described a sector-wide pressure that remains out of their hands. So what is that pressure, and where does it come from?
Home Depot's Risk Is A Frozen Housing Market
The pressure is a stagnant real estate market. During the August 18 call, executives told investors that Home Depot faces frozen housing conditions. They noted that housing turnover, which measures how often homes change hands, has remained at historical lows for four years.
Executives also detailed where this environment is hurting the business. Consumer uncertainty and housing affordability continue to hold back demand for larger home improvement projects. Big-ticket comp transactions, meaning purchases over $1,000, rose 2.4% from a year earlier in the fiscal second quarter, but the company noted that larger discretionary projects remain under pressure.
This subject surfaced when analysts asked why the company's sales guidance still covers such a wide range. Home Depot maintained its target for comp sales, which are sales at stores open at least a year, at flat to 2% growth. Executives said that range remains appropriate, citing the frozen housing market as one reason. This means the warning comes directly from the company regarding a market it cannot control.
Is Any Part Of Home Depot Shielded From Housing?
Very little of the business appears insulated. Home Depot's main reporting segment generated 92% of revenue in the latest fiscal year, and sales for that unit slipped 0.7% from the year before. Executives noted that the current pressure affects anyone connected with housing, so we view that entire segment as exposed.
The share price has already moved, and Home Depot stock now sits about 24% below its 52-week high. It currently trades at 20.3 times earnings, compared to 21.9 for the S&P 500. Over the past ten years, Home Depot's multiple has ranged from 16.5 to 27.6.
Current prices appear to reflect some of this housing pressure, though perhaps not a worst-case scenario. If the multiple fell to 16.5 with earnings unchanged, the shares would trade about 19% lower.
Is Home Depot Already Feeling The Housing Freeze?
The impact has been gradual so far. Home Depot has navigated low housing turnover for four years, and its comp sales are still rising. Those sales increased 1.7% in the fiscal second quarter, a period when executives said their teams successfully took market share. However, customers are making fewer trips while spending more per visit. The average ticket rose 2.8%, while comp transactions fell 1.0%.
At the same time, profitability is narrowing. Home Depot reported an operating margin of 14.9% three years ago and 13.1% a year ago. Over the past twelve months, that figure sits at 12.4%, leaving the company less room to absorb a weaker housing market.
The housing pressure builds slowly. A market shock is a faster risk for holders. During the 2022 inflation shock and Fed tightening, Home Depot stock fell about 34%, compared to a 24% decline for the S&P 500.
This is a risk to monitor rather than an immediate emergency. The housing freeze is a real but slow-moving factor, and the current stock price appears to assume at least part of the impact. The upcoming third-quarter report will show whether customers are still visiting stores. A fall in comp transactions deeper than the 1.0% drop seen in the second quarter would show smaller purchases weakening further, since big-ticket transactions were still up 2.4% in that quarter.
Does This Mean You Should Act On HD?
Our purpose is to inform you with unique data so you can make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.
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