Lowe's Cuts Sales Forecast as DIY Renovation Spending Stalls, Homebuilder Confidence Still Stuck Below 40

Lowe's told investors Wednesday it now expects zero growth in annual comparable sales for fiscal 2026, walking back an earlier forecast of flat to 2% growth, according to Reuters. Shares dropped 3.3% in premarket trading on the news.

The Mooresville, North Carolina-based retailer posted second-quarter net earnings of $2.4 billion and diluted EPS of $4.27, flat compared to the same quarter last year, according to Lowe's own earnings release distributed via PR Newswire. Adjusted diluted EPS rose 1.6% to $4.40, a figure that includes an $0.11 per-share benefit from IEEPA tariff refunds.

Total sales climbed to $26.0 billion from $24.0 billion a year earlier, but that figure missed Wall Street. Analysts polled by LSEG had expected $26.16 billion. Comparable sales rose just 0.2%, well short of the 0.8% growth analysts were forecasting.

CEO Marvin Ellison pointed to a split inside the business. Pro and home-services demand grew, and online sales jumped 15.7%. But DIY spending, historically Lowe's bread and butter, stayed weak. That's a structural problem for Lowe's specifically. It has always leaned harder on do-it-yourself shoppers than its biggest competitor, which makes it more exposed when ordinary homeowners decide a new kitchen can wait.

Home Depot, by contrast, beat quarterly sales and profit estimates on Tuesday and kept its full-year targets intact, according to Reuters, by betting on demand for smaller repair and maintenance jobs rather than big-ticket remodels. Same industry, same macro headwinds, different customer mix, different result. Each company sells to a different group.

Lowe's now projects fiscal 2026 total sales of $92.0 billion, down from a prior range of $92.0 to $94.0 billion, according to figures published by StockTitan. Adjusted diluted EPS guidance of roughly $12.25 sits at the low end of the company's earlier $12.25-to-$12.75 range. The company operated 1,761 stores as of July 31 and paid $673 million in dividends during the quarter.

Why homeowners aren't renovating

The reason isn't complicated: higher mortgage rates and a frozen housing market. Reuters reported that a slowdown in existing-home sales has cut into renovation activity tied to home purchases, a key demand driver for Lowe's and Home Depot alike. People aren't buying homes, so they aren't remodeling the homes they just bought.

That tracks with what's happening on the ground. Redfin's July analysis found the estimated number of active U.S. homebuyers fell to 966,752, a record low and down 2.5% from June, according to the Epoch Times. Sellers outnumbered buyers by 51.3%, just shy of December 2025's record gap. Redfin senior economist Asad Khan said buyers are dropping out of the market faster than sellers are, which is handing the buyers who remain more leverage.

Thirty-nine of the 49 major metro areas Redfin tracked qualified as buyer's markets in July. Miami topped the list with 154% more sellers than buyers, driven by pandemic-era overbuilding, rising insurance costs and climate-risk exposure, according to Redfin's data as reported by the Epoch Times. Nashville, Houston, San Antonio and Austin rounded out the top five, all markets with heavy homebuilding pipelines still adding supply into weak demand.

Builders see a sliver of daylight, but not much

On the construction side, the National Association of Home Builders' Housing Market Index, produced with Wells Fargo, ticked up one point to 35 in August, according to Breitbart's reporting on the NAHB data. That beat economist forecasts of a decline to 33. But a reading below 50 still means more builders see conditions as bad than good, and the index has now stayed below 40 for 16 straight months.

NAHB Chief Economist Robert Dietz said August marked the 16th consecutive month that at least 30% of builders cut prices to move inventory. Thirty-five percent of builders cut prices in August, down slightly from 37% in July, with an average price cut of 6%. NAHB Chairman Bill Owens cited rising gas and diesel prices pushing up material costs on top of already-elevated interest rates.

Elevated mortgage rates are suppressing home sales, which is suppressing renovation spending, which is showing up directly in Lowe's numbers. The open question is what breaks the logjam first: a Federal Reserve rate cut, a builder price war steep enough to draw buyers back in, or neither, in which case Lowe's isn't the only retailer that will be trimming guidance before the year is out.