You get a feel for the housing market in a lot of ways. You can look at listings online or in newspapers. You might drive around a neighborhood to check out the houses, the people who live there, and the condition of roads and schools.
Sometimes, you get signals from the stock market that make you a more informed buyer or seller.
The stock market offered a downer of a signal on Feb. 25 to the housing market, thanks to weak earnings guidance from Lowe’s Companies, one of the biggest home-improvement retailers.
Lowe’s sells wood, appliances, tools, cement, and flowers and plants across the country. A key customer segment is builders. Another is contractors doing renovations. A third is homeowners embarking on various projects around the home.
Like most retailers dealing with construction and home improvement, Lowe’s knows that the housing market since the end of the Covid pandemic has struggled for several reasons.
- Job growth in many part of the country is slowing.
- Prices are high in many markets, especially on the East and West Coasts.
- And there are a lot of homeowners who refinanced into low-rate mortgages who don’t want to move or can’t afford to move.
“While short-term interest rates have been coming down, affordability and the lock-in effect continue to pressure demand,” Brandon Sink, Lowe’s chief financial officer, told analysts.
He described consumer spending as resilient, yet also noted that many consumers are cautious about big discretionary purchases. And it’s not clear how larger tax refunds, expected this year thanks to the 2025 tax bill, will translate into home-improvement projects.
In terms of the housing market generally, “it is also unclear when mortgage rates will ease, which will continue to exert pressure on existing home sales and new home construction,” he added.
Here we must note that mortgage rates are right around 6% — the lowest level since 2023, according to Mortgage News Daily data — but nowhere near the 3% rates we saw in 2020.
“Taking all of this into account,” Sink said, “we forecast the home improvement market to be roughly flat this year in a range of down 1% to up 1%.”
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The home-improvement market speaks
Along with a lackluster home-improvement market, just about any stock of companies that operated in and around housing has dropped.
The iShares U.S. Home Construction exchange-traded fund dropped 3.4% to $106.43. The ETF had been up as much 14.4% for the year, ahead of the Lowe’s earnings report. By the end of the day, the gain had shrunk to 10.5%. The ETF had fallen about 5% in 2025.
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The fund invests in home builders, home-improvement retailers, and related companies.
Lowe’s shares fell 5.6%. Rival Home Depot’s shares were off 2.3%. Sherwin Williams, the paint manufacturer, saw its shares drop 2.1%.
Home builders’ shares dropped in interesting ways. D.R. Horton, the biggest U.S. builder, saw its shares slump nearly 4%. Lennar, like Horton, competes in multiple markets and price segments. Its shares fell 4.9%. Toll Brothers fell a modest 1.6%, but it targets affluent buyers, whose demand for homes and home improvements is fairly steady.
And Lowe’s is not an outlier. Home Depot sees roughly the same thing, Richard McPhail noted on that company’s call, Barrons reported.
“Our customers also tell us they have concerns over general economic uncertainty, including inflation, growing job concerns, and higher financing costs.”
The homebuying, renovation situation isn’t dire — yet
But it’s not even March yet, you may be thinking. Aren’t the housing folks panicking a bit early? If nothing else, much of the country has been busy shoveling out snow, dealing with freezing temperatures, or drying out homes flooded by December storms.
Maybe not. Buying a house or renovating a kitchen or bathroom takes months of planning and arranging financing. And now is when you expect to see orders for homes, wood, tools, paint, caulk guns, and dishwashers starting to come in.
The orders are coming in — but not at a feverish pace. Weather has been a problem. The job situation weighs on many.
Some states have unique issues. Massive increases in insurance premiums weigh on sales in California and anywhere along the coast in Southern states.
What the national home sales numbers show
Pending home sales were off 0.8% in January from December and 0.4% year over year, according to the National Association of Realtors. The organization said existing home sales fell 8.4% from December to January and were down 4.4% from a year earlier to a seasonal annual rate of 3.91 million units.
Sales ran at a clip of 4.1 million units in 2025, about 38% lower than levels last seen in 2022.
So, are buyers lining up for 6% mortgages? Yes, says the Mortgage Bankers Association, which tracks mortgage applications. Loans to buy homes are up a bit this year, but demand to refinance existing loans now constitutes about 58% of mortgage demand.
Maybe confidence will build as the weather warms up. Most home sales occur between May or so and September.
And maybe shares of Lowe’s, Home Depot, and all those home builders will bounce back.
Related: Home Depot resets on ‘frozen’ housing market guidance
