Home Depot's sales rose 5.7% while its comparable sales rose 1.7% — the gap is acquisitions, because the housing market is 'frozen'

Every figure in this article is drawn from Home Depot's second-quarter fiscal 2026 results, published 18 August 2026, and its SEC filings, or from CNBC as attributed. Home Depot's fiscal year ends in late January or early February. Sections marked as analysis are identified as such.

Two numbers from Home Depot's second quarter, side by side. Total sales: $47.9 billion, up 5.7 per cent. Comparable sales — the same stores, a year apart: up 1.7 per cent, and 1.3 per cent in the United States.

The gap between those two figures is not a rounding difference. It is most of the growth, and it comes from businesses Home Depot has bought rather than demand it has generated.

The quarter

Net earnings were $4.8 billion, or $4.79 a diluted share, against $4.6 billion and $4.58 a year earlier; on an adjusted basis, $4.92 against $4.68. The company beat expectations, and attributed the beat to share gains with both professional contractors and do-it-yourself customers.

It then reaffirmed rather than raised its full-year outlook: comparable sales flat to up 2 per cent, total sales growth of 2.5 to 4.5 per cent, and adjusted earnings roughly flat to 4 per cent higher than last year's $14.69. Chief financial officer Richard McPhail cited widespread market uncertainty.

The phrase management used for the underlying environment was "frozen housing market conditions", with customers still deferring larger projects. That is an unusually blunt description from a company that spends most of its investor communication explaining why conditions are about to improve.

It is worth noting how long this has now gone on. Home Depot's comparable sales have been broadly flat to modestly positive for the better part of three years, through changes in inflation, employment and consumer confidence, because the one variable that drives them has not moved. Few large businesses are this dependent on a single macroeconomic input, and fewer still are this candid about it.

Why the housing market decides this business

Home improvement spending is driven far less by how much money households have than by whether they are moving. People renovate when they buy — a new kitchen before moving in, a bathroom to sell, a deck for the family that has just arrived. When existing-home sales stall, the single largest source of large-project demand stalls with them, regardless of employment or wages.

That is the mechanism behind the word "frozen". Households that financed at low rates during the pandemic will not give up those mortgages to buy at current rates, so they stay put. Staying put means no move-in renovation, no sale-preparation work, and a strong preference for the small repairs that keep a house functioning over the large projects that change it.

Home Depot's comparable sales are exactly what that produces: mildly positive, driven by maintenance and consumables, with big-ticket categories weak. A 1.3 per cent US comparable gain in a year of low unemployment is not a demand problem in the ordinary sense. It is a mobility problem.

The distinction matters for anyone reading across from these results to the wider economy. A weak Home Depot comparable-sales number is not evidence that households are short of money — employment has held and wages have grown. It is evidence that the housing market has stopped functioning as a market, with sellers unwilling to sell and buyers unable to buy, and that a large category of consumer spending is frozen alongside it.

Analysis: growth by acquisition

Home Depot's response has been to stop waiting. Rather than depend on the do-it-yourself customer returning, it has spent heavily buying its way deeper into the professional supply chain — distribution businesses that sell roofing, drywall and building materials directly to contractors, on credit, delivered to a job site, in volumes no retail aisle can serve.

This is a genuinely different business from operating orange warehouses. It is lower-margin, more capital-intensive, and it competes with regional distributors on service and delivery rather than on price and assortment. It also grows when contractors are busy even if homeowners are not, and repair-and-remodel work for professionals has held up considerably better than consumer projects.

The strategic logic is sound and the accounting consequence is worth watching. When total sales grow three times faster than comparable sales, an investor is being asked to judge two things at once: whether the core retail business is healthy, and whether the acquisitions were bought well. Only the first is visible in the comparable-sales line, and it is currently reporting 1.7 per cent.

There is a second consequence that shows up further down the income statement. Distribution businesses carry structurally lower gross margins than retail, so a mix shifting toward professional supply drags the blended margin down even when every part of the company is performing well. Judging Home Depot on margin percentage over the next few years will produce a misleading answer; the right measure is profit dollars and return on the capital spent acquiring them.

Analysis: reaffirming is a decision

The most informative thing Home Depot did this week was decline to raise guidance after beating expectations. Retailers beat and raise as a matter of routine; beating and reaffirming is a deliberate signal that management does not believe the beat tells you about the second half.

That reading is consistent with the rest of the release. Share gains with both customer groups mean Home Depot is taking a larger slice of a market that is not growing — a good outcome, and one with a natural ceiling. There is only so much share available before the size of the market becomes the binding constraint again.

Home Depot's competitive position through this period has been the quiet good news. In a flat market the strong operator takes share from weaker regional players and independents who cannot match its purchasing, logistics or credit terms — and a frozen decade, unpleasant as it is to live through, tends to leave the survivor with a larger share of the eventual recovery.

The eventual unlock is not in Home Depot's control at all. It is the point at which mortgage rates, house prices and the accumulated pressure of households that have outgrown their homes combine to make people move again. When that happens, this company has an enormous amount of deferred demand waiting for it — every kitchen not replaced and bathroom not renovated over four years of stasis.

Until then it is doing the sensible thing: taking share, buying distribution, protecting margin and telling investors the truth about the environment. "Frozen" is not a word chosen by accident, and it is more useful than another quarter of optimism would have been.

For the record, the market it is waiting on is not small. Home improvement in the United States is a market of several hundred billion dollars a year, and the backlog of postponed work has been accumulating since rates rose. Whenever the thaw arrives, the numbers on the other side of it are likely to look dramatic — which is precisely why a company reporting 1.7 per cent comparable growth still trades as a quality asset rather than a distressed one.