Citi Analysts Break Down Why Home Improvement Stocks Lag in 2025
Citi outlines the headwinds weighing on home improvement retailers as the sector trails broader market gains.
Home improvement stocks have underperformed the broader market, and analysts at Citi have offered a framework for understanding why the sector continues to struggle despite relatively resilient consumer spending in other retail categories.
The headwinds facing major home improvement retailers are tied to several intersecting forces, including a sluggish housing turnover environment. When existing home sales slow, homeowners tend to defer large renovation projects, directly cutting into the revenue streams of big-box home improvement chains.
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High mortgage rates have compounded the problem by locking many potential sellers into their current homes while simultaneously discouraging buyers from entering the market. The resulting freeze in housing transaction volume has had an outsized effect on discretionary home spending, which typically spikes around the time of a home purchase.
Macroeconomic uncertainty has also tempered contractor and professional demand, a segment that represents a significant portion of home improvement sales. Citi's analysis points to this dual weakness in both the do-it-yourself and professional customer bases as a key reason for the sector's muted performance relative to peers in other consumer categories.
While some analysts retain a longer-term constructive view on home improvement stocks given aging housing stock and eventual rate normalization, near-term catalysts remain elusive, according to Citi's assessment. Continue reading at All News.
