Home Depot has been grappling with weak consumer demand amid headwinds from the U.S. housing market. As the company fights to boost sales, it is scaling back a key employee benefit after it recently enacted several bold cost-cutting measures.
In the third quarter of 2025, Home Depot’s U.S. comparable sales only increased by 0.1% year over year, according to the company’s most recent earnings report. Also, recent data from Placer.ai showed that foot traffic at Home Depot’s same-store locations fell 0.4% year over year during the quarter.
Home Depot’s low sales come as many consumers have been avoiding purchasing new homes due to high interest rates and low supply in the U.S. housing market. It also comes after it raised some of its prices in its stores due to tariffs.
During an earnings call in November, Home Depot CEO Ted Decker said that the company continues to see customers cut back on tackling large home improvement projects, which are usually funded by loans.
“What’s impacting us and home improvement is the ongoing pressure in housing, in incremental consumer uncertainty,” said Decker. “So take housing. I mean, housing has been soft for some time. We all know the higher interest rates and affordability concerns. But what we’re seeing now is even less turnover; the housing activity is truly at 40-year lows as a percentage of housing stock.”
According to data from the National Association of Realtors, existing-home sales in the U.S. declined by 4.4% year over year last month, while the median existing-home sales price reached $396,800.
Even though interest rates have been declining in recent months, data from Freddie Mac showed that the average 30-year mortgage rate remains above 6%.
“Due to low supply, the median home price reached a new high for the month of January,” said NAR chief economist Lawrence Yun in a press release.
As Home Depot struggles to increase sales, it has decided to limit employee bonuses, according to a recent report from Bloomberg.
The home improvement retailer has reportedly sent a memo to eligible employees in its stores and corporate offices informing them that it is raising the minimum sales performance threshold for bonuses from 90% to 95%.
When employees reach that minimum, they will receive an adjusted payout of 25% of the target, down from 50%.
Related: Home Depot and Lowe’s quietly gain new rival
Home Depot said in the memo that the new bonus restrictions are more closely aligned with “pre-pandemic standards.” These changes will be reflected in bonuses that are distributed in September.
