Lowe's Is Down 30%, and Home Depot Is Down 18%. Here's the Housing Stock I'd Buy Even With 30-Year Mortgage Rates at 7.3%.

Home prices have reached a point where many people simply can't afford to move from renting (or living with others, such as their parents) to buying. With the housing market already facing this headwind, the problem only worsened when the Federal Reserve began raising interest rates to fight high inflation. Now, not only are homes prohibitively expensive, but taking out a mortgage costs more than it used to, too.

This dynamic is terrible for housing-related stocks like Home Depot (NYSE: HD) and Lowe's (NYSE: LOW). In fact, Home Depot is now 18% below its 52-week high. Lowe's story is even worse, with its shares down 30%. Both of these retailers are highly likely to survive the current headwinds, but Lowe's looks like the bigger bargain. Here's why.

Image source: Getty Images.

Nobody is buying homes, and that's bad

The housing market is a huge economic driver. The fact that the housing market appears to be stalled is not good news. For Home Depot, the largest home improvement retailer, and Lowe's, the number two player, the sluggish housing market means people are doing less construction and home refurbishing. When people buy new homes, they generally come in and change things to the way they like them.

To be fair, neither company's business has exactly fallen off a cliff. Home Depot's same-store sales, which measure sales results at existing locations, rose 1.7% in the second quarter of 2026. Lowe's same-store sales rose 0.2%. However, investors are clearly worried that the future is going to remain difficult for both companies. And, in truth, it likely will over the near term.

Investors are really downbeat on Lowe's

Investors are clearly more downbeat on Lowe's than Home Depot, and the same-store sales figures help explain why. But this could open up a buying opportunity for long-term investors. For starters, people who stay in their homes rather than move aren't just going to sit around doing nothing. They will continue to upgrade and change their abodes. This may include more do-it-yourself work, eventually, but often involves hiring a professional.

Home Depot has long focused heavily on serving professional contractors, while Lowe's, which has historically had more of a consumer focus, is increasingly focused on the professional customer segment. That could, in time, give Lowe's a growth boost as it expands into a new area. However, investors don't appear to be giving it enough credit for this shift, noting that it continues to integrate its 2025 acquisitions of pro-focused Aritsian Design Group and Foundation Building Materials. The integration process is a headwind for now, but once complete, these investments could eventually turn into an attractive growth driver. Home Depot's strong contractor business highlights the long-term value of the opportunity.

The valuation difference here is worth considering if you are a long-term dividend investor. While Home Depot's 2.9% yield is higher than Lowe's 2.5%, Lowe's is a Dividend King with 63 consecutive annual dividend increases. Home Depot's dividend streak is nowhere near as long. And, more to the valuation point, Home Depot's price-to-earnings ratio is slightly above its five-year average as of this writing, even as its price-to-sales ratio is below its average. Lowe's P/E and P/S ratios are both notably below their long-term averages, highlighting how unloved it is on Wall Street today.

Both are good businesses, but Lowe's is probably a better value

It wouldn't be a mistake to buy Home Depot, noting that both Lowe's and Home Depot are well-run retailers. And Home Depot's higher yield may be enough to entice you to buy it over Lowe's. However, Lowe's Dividend King status, more attractive valuation, and increasing focus on professional customers should probably give it the edge for long-term, income-focused investors.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy.