Back in the summer, there wasn't much time for tool time.

People were worried about the economy and inflation, and they weren't thinking much about home repairs.

Related: Analysts reset Home Depot stock price target ahead of Fed rate cut

The two biggest home improvement retailers in the country — Home Depot  (HD)  and Lowe's  (LOW)  — were reporting fiscal-second-quarter earnings, and their chief executives were feeling mighty apprehensive about the economy.

Marvin Ellison at Lowe's told analysts that "there still remains a great deal of uncertainty, particularly around interest rates and inflation."

"In terms of housing specifically, we're seeing significant implications as a result of a lock-in effect," Ellison said.

"Simply put, people aren't moving nearly as often as they typically do because current mortgage rates are so much higher than their existing rates," he added. "And as a consequence housing turnover is hovering near its lowest levels since the mid-1990s."

Ellison said that while the company had delivered positive “[comparisons] in Pro and online sales, we continue to manage through softness in DIY demand.”

Home Depot CEO warned of 'macroeconomic uncertainty'

And Ted Decker at Home Depot said that “during the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects.”

"Additionally, we saw continued softness in spring projects, which were also impacted by the extreme weather changes throughout the quarter," Decker said during the company's earnings call.

Related: Analysts retool Home Depot stock price target following earnings

"When we look at the performance in the first six months of the year, as well as continued uncertainty around underlying consumer demand, we believe a more cautious sales outlook is warranted for the year," Decker said.

Billy Bastek, Home Depot’s executive vice president of merchandising, told analysts that “Pros outperformed the DIY customer, but both were negative for the quarter.”

But there were some glimmers of hope.

In July, a study by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University said that after a modest downturn, homeowner expenditures for improvements and repairs were expected to trend up through the first half of 2025,

The Leading Indicator of Remodeling Activity report, released in July, projected that declines in annual spending for renovations and maintenance to owner-occupied homes would ease to just -0.5% through the second quarter of 2025.

“Economic uncertainty and continued weakness in home sales and the sale of building materials are keeping a lid on residential remodeling, although many drivers of spending are starting to firm up again,” Carlos Martín, director of the Remodeling Futures Program at the center, said in a statement.

“After several years of frenzied activity during the pandemic, owners are now making upgrades and repairs to their homes at a steadier and more sustainable pace," Martin said.

Abbe Will, associate director of the Remodeling Futures Program, said that annual spending on homeowner improvements and maintenance was expected to reach $466 billion through the second quarter of next year, on par with spending over the past four quarters.

Analyst says housing activity should pick up

“The home remodeling slowdown should continue to be relatively mild, with activity stabilizing just shy of last year’s peaks,” Will said.

And then on Sept. 18, the Federal Reserve cut the Federal Funds Rate by 0.5 percentage point to a range of 4.75% to 5%.

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• Fed rate cuts may not guarantee a September stock market rally

Home Depot shares are up nearly 15% year-to-date and up 30.2% from a year earlier. Lowe’s stock is up nearly 19% year-to-date and 26% from a year earlier.

Both companies saw their shares rise after the rate cuts were announced.

"With rate cuts finally here and a Fed easing cycle underway, home-related names should soon see the beginnings of fundamental recovery exiting [fiscal 2024]," analysts at Mizuho Americas said on Sept. 20.

"In our view, and in line with recent management commentary, housing activity should gradually pick up, unlocking significant pent-up demand despite still elevated home pricing broadly," the firm said.

Mizuho reiterated its Top Pick designation on Lowe's, as well as positive views on Home Depot and furniture and home goods e-commerce retailer Wayfair  (W) .

On Sept. 24, analysts at Oppenheimer adjusted their price targets for Home Depot and Lowe's.

The investment firm raised its price target on Home Depot to $400 from $345 and affirmed a perform (effectively neutral) rating on the shares.

Oppenheimer also upgraded Lowe's to outperform from perform, also with a price target of $400, up from $345, suggesting upside potential of more than 15% from current levels.

Oppenheimer said its more upbeat stance on Lowe's reflects a still discounted share valuation and "ongoing operational slack" within the company's business model.

Oppenheimer said it was assuming a "somewhat more constructive stance" on the shares of the leading home improvement retail chains.

Prospects for demand trends within home improvement retail and at leading operators will “gradually solidify and return to normalized expansion algorithms.” That's as lower lending rates spur improved housing activity, likely support ongoing higher home prices, and encourage shoppers to make larger-ticket purchases, the firm said.

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