Home Depot (HD) reported mixed results for the second quarter. Revenue was $43.18 billion versus expectations of $43.79 billion, and adjusted earnings were $4.67 per share versus expectations of $4.52 per share. The company lowered its full-year guidance and expects revenue to decline between 3% and 4%, but will things improve?

Adam Baumgarten, managing director of Zelman Associates, joins Catalysts to discuss Home Depot’s latest quarterly results and their impact on the broader real estate market.

Looking at Home Depot’s numbers, Baumgarten notes, “I think you’ve seen a normalization of home improvement spending in general. As you know, there was a huge increase in 2020 and 2021, and we’ve given back some of those gains. Part of that is the shift in wallet share from goods to services. And I think even within goods, there’s been an increase in home improvement items.”

He adds: “We think that percentage of total consumer spending will have returned to some degree of normal by the end of this year. So we think we’ll see growth in comparables again next year… But any kind of recession that’s not factored into our forecast could push that out a little further. Also, I think there was a little more optimism earlier in the year because people were more likely to expect rates to come down earlier in the year, and that’s now been delayed, as we all know.”

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This article was written by Nicolas Jacobino