The latest earnings reports from Home Depot, Lowe’s, Ace Hardware, and other industry leaders show that demand has not disappeared, but it has become more selective. Finding growth looks different in today’s home improvement market than it did just a couple of years ago.Contractors still have opportunities to grow, but they are increasingly competing for market share rather than relying on a rising tide to lift everyone.
The second quarter reports show that homeowners are still spending on their homes, but the market is becoming much more selective. Repair, replacement, service work, and Pro activity continue to hold up better than large discretionary projects. At the same time, higher average tickets due to increased prices make retail sales look healthier than the actual transaction volume shows.
This is an important distinction.
This is still a very large home improvement market. There is plenty of work to be won. But contractors cannot count on broad market growth to carry the business. Homeowners are taking longer to make decisions, scaling back some projects, and prioritizing work that feels necessary or provides clear value.
The companies positioned to grow in this environment will need to capture a greater share of the available work and execute it efficiently once the job is sold.
Here is what the latest earnings reports are telling us.
Home Depot: Positive Growth, but Smaller Projects Continue to Lead
Home Depot delivered a relatively strong second quarter despite the uncertainty surrounding the broader home improvement market.
Sales increased 5.7% to $47.9 billion, while comparable sales increased 1.7%. U.S. comparable sales were up 1.3%, and Home Depot reaffirmed its full-year guidance for comparable sales ranging from flat to 2% growth.
The underlying numbers provide more context.
Comparable customer transactions declined 1%, while comparable average ticket increased 2.8%. In other words, Home Depot generated more sales from fewer transactions.Management also specifically noted that customers continued to engage in smaller projects.
That fits the pattern contractors have witnessed throughout 2026. Homeowners have not abandoned home improvement. They are being more deliberate about where they spend.
There were also encouraging signs within categories that matter to installation contractors. Plumbing, kitchens and baths performed well, along with several other project-related categories. Services also remained an important part of the business.
Home Depot continues to invest heavily in its relationship with professional contractors. Its expanding distribution network, including SRS and GMS, gives the company greater access to specialty building products and professional customers beyond the traditional store environment.
For contractors, Home Depot’s results are reasonably encouraging.
Demand remains active. Homeowners are still completing projects. Pros continue to represent an important growth opportunity. But the decline in transaction volume is worth watching. A growing sales number does not necessarily mean more homeowners are starting projects.
Lowe’s: Pro and Home Services Remain Bright Spots
Lowe’s quarterly earnings tell a similar story, although the company sounded somewhat more cautious about the remainder of the year.
Total sales increased to approximately $26 billion, while comparable sales increased just 0.2%.
The strongest parts of the business were familiar. Lowe’s reported continued growth in Pro, Home Services, and online sales. Digital sales increased 15.7%, extending a trend we have been watching for several quarters.
At the same time, Lowe’s acknowledged continued pressure on discretionary DIY spending.
That combination says quite a bit about where the market currently stands.
Homeowners are still moving forward with projects, particularly when professional installation or a clear need is involved. Large discretionary purchases remain much harder to predict.
Lowe’s also reduced its full-year outlook. This should grab contractors’ attention. The company now expects approximately $92 billion in sales and flat comparable sales for 2026, compared with its previous expectation of flat to 2% comparable growth.
Lowe’s is not predicting a collapse in home improvement activity. It is acknowledging that broader demand is unlikely to provide much organic growth for the remainder of the year.
The continued strength of Pro and Home Services is therefore especially important.
Lowe’s has spent billions expanding its professional capabilities through acquisitions such as Foundation Building Materials and Artisan Design Group. Those investments give the company deeper access to professional distribution, installation, and fulfillment.
The strategy makes sense in a market where contractors and professionally completed projects are holding up better than discretionary DIY spending.
Ace Hardware: Steady Growth In a Selective Market
Ace Hardware once again provided one of the stronger earnings reports in the industry.
Second-quarter revenue reached a record $3 billion, increasing 5.9% from the previous year. Net income increased more than 30%, and digital revenue grew 12.8%. Ace’s approximately 4,000 stores that report daily sales data also recorded a 1.1% increase in same-store sales.
But there is another detail worth noting.
Average ticket increased 3.1%, while transactions decreased 1.9%. That looks remarkably similar to what Home Depot experienced. Customers are spending more when they visit, but there are fewer transactions.
Ace’s performance is particularly interesting because its business is heavily exposed to the everyday needs of homeowners: hardware, plumbing, heating and cooling, electrical, paint, lawn and garden, tools, and building supplies.
Those categories benefit from something discretionary remodeling does not always have.
Things break.
Ace serves homeowners when something needs to be repaired, replaced, or maintained. Those projects tend to follow the condition of the home rather than the latest consumer confidence survey. As America’s housing stock continues to age, that creates a level of stability many discretionary categories do not enjoy.
Floor & Decor Shows the Pressure on Larger Projects
Floor & Decor provides a useful contrast.
Net sales increased 3% during the quarter, but comparable store sales declined 2.1%. Management specifically acknowledged that demand for larger discretionary flooring projects remained uneven.
However, there was some improvement as the quarter progressed. Comparable sales went from a 5.1% decline in April to nearly flat in June.
That is encouraging, but the broader message remains clear. The homeowner considering a complete flooring replacement has more flexibility to postpone than the homeowner dealing with a failed water heater or leaking roof. Larger projects can be delayed, reduced in scope, or reconsidered entirely.
Flooring contractors are still finding work, but the sales process may require more patience. Contractors may see homeowners reduce project scope or complete homes in phases rather than replacing everything at once.
Those changes have consequences beyond sales.
More phases can mean more schedules, more customer communication, more mobilization, and more production coordination for the same household.
Tractor Supply and Builders FirstSource Show How Uneven the Market Has Become
Results elsewhere in the home improvement and building supply industry reinforce how selective this market has become.
Tractor Supply reported a 2.3% increase in net sales, but comparable store sales declined 1.5%. The company cited weakness in seasonal big-ticket products and discretionary categories while noting that its more needs-based businesses remained resilient.
Builders FirstSource faced considerably more pressure.
Second-quarter sales declined 8.8% to approximately $3.9 billion, and the company reported a small net loss compared with $185 million in net income during the same quarter last year.
Builders FirstSource is much more exposed to residential construction, where high interest rates and weaker housing starts continue to weigh on demand. The company now expects declines in both single-family and multifamily starts in its markets and approximately a 1% decline in repair and remodel activity.
Even within a difficult quarter, Builders FirstSource emphasized cost control, technology, customer connectivity, and operational efficiency.
That is another important theme running through these earnings reports.
When companies cannot control the market, they turn their attention toward the parts of the business they can control.
The Market Is Slowing, but Home Improvement Is Still a Massive Industry
The earnings reports make more sense when viewed alongside broader remodeling forecasts.
Harvard University’s Joint Center for Housing Studies expects annual spending on home improvements and repairs to remain around $519 billion through mid-2027.
That is an enormous amount of activity.
The concern is growth.
Harvard expects year-over-year remodeling growth to slow to approximately 0.5% by the second quarter of 2027. Flattening building-product sales, economic uncertainty, fewer housing starts, and low housing turnover are limiting stronger gains.
That helps explain why so many contractors have mixed feelings about the market. Revenue can grow even as customer traffic slows, and a contractor can stay busy while seeing fewer new opportunities. Those are not conflicting signals. They are different parts of the same market.
The home improvement market is not disappearing. There simply is not much broad-based growth available to make everyone’s business bigger.
Q2 Looks More Like a Market Share Battle
That may be the most important takeaway from the second quarter.
In a rapidly growing market, contractors can grow because demand itself is expanding.
In a flatter market, growth increasingly comes from winning work that could have gone somewhere else.
A flatter market raises the stakes across the business. Contractors need to generate qualified opportunities, convert more selective homeowners, and execute consistently once the job is sold. When new work is harder to win, every project carries more value than it did in a faster-growing market.
Protect the Value of Every Job Sold
For contractors, there is another side to competing for market share.
Once you win the job, you need to keep the profit that came with it.
A thinner pipeline makes production mistakes more expensive. A poorly scheduled job, unnecessary return trip, missed customer update, or crew coordination problem consumes margin from revenue that required more effort to acquire.
That gives production management a different role in this environment.
The objective is not simply to organize jobs. Contractors need visibility into production so they can keep work moving, reduce unnecessary friction, and get more value from the jobs already on the books.
Cilio helps contractors manage that part of the business by bringing scheduling, production tracking, communication, and operational workflows together while connecting with the other systems they already use.
When growth is earned one project at a time, execution becomes an important part of the growth strategy.
2026 Still Has Plenty of Opportunity
Q2 2026 does not give contractors an easy market, but it does give them a workable one.
The home improvement market remains enormous. Demand continues to be strongest in repair, replacement, and service work, while Pro customers remain a consistent source of growth for many retailers.
The difference is that homeowners are no longer lining up to spend money.
The companies who get ahead for the remainder of 2026 will be the ones who make the most of every lead, every job, and every dollar of margin they keep.
Cilio helps installation contractors streamline production, improve visibility, and keep work moving from sale to completion. Learn how Cilio can help your team operate more efficiently and protect margin in today’s market.
