Citi Analysts Explain Why Home Improvement Stocks Lag in 2025

Home improvement stocks have underperformed broader market benchmarks in recent months, and analysts at Citi say a confluence of macroeconomic pressures is largely responsible for the sector's struggles. The bank's research team pointed to a sluggish housing turnover environment as a primary drag, noting that consumers tend to spend significantly more on renovation and repair projects when they are buying or selling homes.

Elevated mortgage rates have kept many existing homeowners locked into properties they might otherwise sell, effectively freezing a pipeline of discretionary spending that retailers like Home Depot and Lowe's have historically relied upon. With fewer transactions occurring in the residential real estate market, the so-called "halo effect" of home purchases — which typically triggers a wave of appliance, flooring, and remodeling purchases — has largely failed to materialize.

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Citi's analysts also flagged softening consumer confidence as a compounding factor. Uncertainty about the broader economic outlook has prompted households to defer large-ticket home projects, opting instead for smaller, needs-based maintenance spending. That shift in consumer behavior has pressured same-store sales figures across the sector.

Beyond demand-side concerns, the analysts noted that comparisons to the pandemic-era home improvement boom continue to weigh on reported growth metrics. The extraordinary surge in renovation activity recorded between 2020 and 2022 set a high baseline that current sales figures struggle to match, making year-over-year performance look weaker than underlying demand trends might otherwise suggest.

Despite the near-term headwinds, Citi's note implied that a meaningful recovery in housing turnover — potentially triggered by any easing in mortgage rates — could serve as a catalyst for the sector. Continue reading at All News.