In its latest quarter, Home Depot saw its sales drop 2% as fewer major projects were undertaken by consumers.

Ted Decker, CEO of Home Depot, said in a news release Tuesday that certain big-ticket, discretionary categories continue to be pressured.

As a barometer for the housing market, Home Depot (HD) is closely watched.

There is a bad feeling about housing among Americans. According to the July Home Purchase Sentiment Index from Fannie Mae, only 18% believe now is a good time to buy. High home prices and unfavorable mortgage rates continue to be blamed for the challenging housing market.

Due to a combination of a home buying frenzy and people’s need for improved space as they stayed at home, home improvement spending grew at an outsized pace during the pandemic – between 2020 and 2022. Inflation of home improvement goods and services, coupled with ample household balance sheets, boosted Home Depot and other home improvement companies.

Home improvement purchases have declined recently due to a reduction in discretionary spending among American consumers.

In line with its guidance, the company expects sales this year to decline by as much as 5% compared to last year.

During pre-market trading, Home Depot’s stock was flat.