For the last five years or so, The Home Depot (NYSE: HD) has fallen out of favor with the stock market. It’s as though the company has become inextricably tied to the housing slowdown.
The stock’s performance tells a brutal story. Home Depot’s shares are down 21.4% over the last year, up just 3% over the last three years, and still down 8% over the past five years.
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However, what people seem to be overlooking is the business’s demonstration of success amid one of the most difficult housing markets in recent years. And that’s how the home improvement retailer could take off should macroeconomic conditions shift ever so slightly.
According to the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales rose 7.4% in March from the previous month, and 3.3% from March 2025.
That’s why Home Depot’s first-quarter earnings for fiscal 2027 on Wednesday (May 19) could send the stock soaring.
2026 has become a homebuyer’s market
According to realtor.com’s latest weekly U.S. housing trends, new listings — a metric that shows how many new homes came on the market — rose 2.6%. This is despite falling median home prices and an increasing active inventory. With average mortgage rates holding steady across the United States over the spring, sellers seem to be interested in reengaging with home buyers.
That gives consumers a lot of choices, and an uptick in new home sales in March isn’t surprising. At a conference last month, Home Depot’s management indicated that consumer balance sheets are currently incredibly robust due to substantial increases in home equity value over the prior six years.
30 Year Mortgage Rate data by YCharts.
Therefore, consumers are not unwilling to spend — they are simply apprehensive about committing to large discretionary renovations amid the current economic uncertainty. In short, a surge in new home sales is excellent news for home improvement retailers.
The company has been working hard
Management admits that the housing market has been “frozen.” Historically, low levels of turnover in existing-home sales usually turn quickly. But over the last three to four years, the sales slump has persisted. But despite these harsh conditions, Home Depot still managed to post five consecutive quarters of positive comparable store sales in the U.S. by late 2025.
