Home Depot's third quarter results did not meet expectations.

Home Depot (HD) shares fell by 4% in early Tuesday trading. This decline was attributed to the retailer's third-quarter results falling short of expectations and its downward revision of year-end forecasts due to the ongoing slowdown in the U.S. housing market.

The company expects "slightly positive" comparable store sales for the year, which represents a decrease from its previous forecast of a 1% increase for 2025.

Year-end profit estimates have also started to show a sharper decline. The adjusted earnings per share estimate is expected to decrease by 5%, which indicates a larger drop than the previously anticipated 2% decline projected in August.

In the third quarter, the company's adjusted earnings per share were reported at $3.74, falling short of the $3.84 earnings estimate according to Bloomberg data. The company’s revenue was recorded at $41.4 billion, exceeding the expected figure of $41 billion.

Same-store sales showed an overall increase of 0.2% and a 0.1% increase in the U.S. However, these sales were expected to rise by 1.3% in the third quarter.

CEO Ted Decker attributed the company's third-quarter results falling short of expectations to "greater-than-expected pressures in certain categories due to a lack of storms in the third quarter."

Joe Feldman from Telsey Advisory Group noted in a note sent to clients on Tuesday morning that "the results and guidance cut is disappointing, as there had been comments about an increase in demand for home improvement for small repairs and maintenance projects last quarter." However, Feldman believes that "the company could benefit if housing demand improves."

Home Depot’s results indicate that the persistently high mortgage rates are keeping more Americans in their current living situations, while a softening labor market has also pressured demand for large-scale renovation projects that are critical for the company’s results.

In the statement released, Decker said, "While the underlying demand in the business remains relatively stable, the expected increase in demand did not materialize in the third quarter." He added, "Consumer uncertainty and ongoing pressures in the housing market disproportionately affect home improvement demand."