1 Reason to Buy Home Depot Stock During This Historically Weak Housing Market
Key Points
Housing turnover is at a record low, and Home Depot stock is down about 11% over the past year.
The one reason to buy: Management says customers have the means to spend on big projects and are waiting for more certainty.
The stock trades near its average valuation on depressed earnings, which could reward patient buyers when housing recovers.
- 10 stocks we like better than Home Depot ›
The housing market has slowed to a crawl, and Home Depot (NYSE: HD) stock is down about 11% over the past year, as of Nov. 2, 2026. For investors planning to hold five years or longer, that weakness could be an opportunity. One reason I would buy the stock now is that Home Depot is poised to benefit from pent-up demand when housing rebounds.
Home Depot sells tools, lumber, and building supplies to homeowners and contractors, and elevated interest rates have held spending on big projects in check. CFO Richard McPhail said in August that housing turnover, or the share of homes changing hands, "has never been lower as a percentage of the housing stock." It has stayed near those lows for four years.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
The reason to buy is that customer demand is waiting, not gone. At a Goldman Sachs conference in September, McPhail said customers "have the means to spend" but feel uncertain about inflation, interest rates, and jobs. "They're not yet ready to unleash that power of spending into large projects, but we know that the potential is there." He added that demand hasn't turned yet.
There are early signs of strength. Home Depot has posted eight straight quarters of same-store sales growth with professional contractors, who make up more than half of its sales. That indicates a business ready to explode when demand for housing finally turns.
The stock's current forward price-to-earnings multiple of 22.5 is slightly below its three-year average of 24.4. But earnings are also still below their fiscal 2022 peak. Buying during a housing slump means paying a price set by depressed profits, which could prove a better value than buying once the outlook is rosy.
The risk is timing: If housing stays frozen for years, the stock could remain stuck as well, although investors would still receive an above-average dividend yield of about 2.8%.
For long-term investors, buying during the slump offers a chance to own the leading home improvement retailer before a housing recovery shows up in its results.
Should you buy stock in Home Depot right now?
Before you buy stock in Home Depot, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Home Depot wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $336,195!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,241,567!*
Now, it’s worth noting Stock Advisor’s total average return is 875% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of November 4, 2026.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Home Depot. The Motley Fool has a disclosure policy.
Recommended Articles
