Stifel downgraded Lowe's to Sell and kept a cautious stance on Home Depot ahead of its upcoming earnings report. The call reflects skepticism that home-improvement retailers can grow much from here while housing transaction volume stays depressed.
That skepticism found an echo from a different corner of the supply chain. ADI Global Distribution, which sells into the building and housing trade, said management is now planning for weak housing demand to persist into 2027. That is a longer timeline than the industry had been assuming, and it means the company is leaning on pricing and the integration of recent acquisitions to carry earnings growth, since a volume recovery is no longer something it is underwriting.
The two data points describe the same mechanism from opposite ends of the chain: retailers serving the end consumer and distributors serving the trade are both pushing out when they expect housing activity to normalize. A downturn that was framed earlier this year as a 2026 trough with 2027 recovery is instead being modeled, at least by this distributor, as still weak in 2027.
Home Depot's earnings report, still ahead, becomes the next test of whether this caution is warranted across the sector or specific to Lowe's and ADI's customer base.