Home Depot vs. Lowe's: Only 1 of These Home Improvement Stocks Is a Buy for 2026

"The home improvement sector has endured a tough 2025, as elevated interest rates and a sluggish housing market suppressed consumer spending on renovations and DIY projects. The Home Depot ( ) stock has declined 11% year-to-date, while Lowe's ( ) is down 2.6%. Although the Federal Reserve has begun cutting rates, mortgage rates remain high, existing-home sales are anemic, and housing inventory stays tight."

"Home Depot is the industry leader with roughly 2,300 stores and a heavy emphasis on professional contractors. It has struggled to generate meaningful growth this year. Third-quarter comparable sales growth inched up only 0.2%, with U.S. comps just 0.1% higher - a trend seen throughout the year as cautious consumers weren't in an extravagant mood given ongoing economic uncertainty. The retailer has faced higher operating costs and some tariff-related pressure, though it only resulted in minor revisions to most full-year guidance."

"The stock trades at a forward price-to-earnings ratio of about 23 times, reflecting its premium positioning but also limiting near-term upside. Analysts are only expecting 2.4% long-term earnings expansion. Looking ahead, Home Depot benefits from its unmatched scale, strong pro-contractor business, and recent acquisitions such as SRS Distribution, which bolster its position in the professional market. It has chosen to focus on the pro segment to offset some of the weakness in the residential market , while prioritizing U.S. sourcing to minimize any tariff impacts."

The home improvement sector underperformed in 2025 because elevated interest rates and a sluggish housing market suppressed consumer spending on renovations and DIY projects. Home Depot stock fell 11% year-to-date, while Lowe's dropped 2.6%. Mortgage rates remain high, existing-home sales are anemic, and housing inventory stays tight, with only modest improvement expected in 2026. Home Depot operates roughly 2,300 stores and emphasizes professional contractors; third-quarter comparable sales rose only 0.2% with U.S. comps up 0.1%. The retailer faced higher operating costs and tariff pressure, prompting minor guidance revisions and a fiscal 2025 adjusted EPS decline expectation. The stock trades near 23 times forward earnings with analysts projecting modest long-term growth.

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