The lock-in that was supposed to be thawing by now already flipped a year ago, and the freeze got worse anyway.
Home Depot’s chief financial officer told CNBC on August 18 that the company is still operating in what he calls “frozen housing market conditions.” It was the same phrase Richard McPhail used at a JPMorgan retail forum months earlier, and roughly the same diagnosis Home Depot gave investors the previous December. The explanation has outlived the data it was built on.
The Excuse Has Been Repeating Since December
Home Depot’s read on housing has not changed shape in nine months, only its audience. At its investor conference last December, the company told Wall Street it did not expect a “catalyst for an inflection in housing activity” and built its preliminary 2026 guidance around that assumption. By the May earnings call, CEO Ted Decker was framing the same stall as “continued pressure in housing” disproportionately hitting home improvement demand. At the JPMorgan forum over the summer, McPhail told the room demand was softening and housing remained frozen. And on the August 18 call covering the second quarter, with net sales up 5.7% to $47.86 billion and comparable sales posting their best quarter since 2022, he reached for the identical word again: frozen. Homeowners, he told CNBC, “have the means to spend, they’re just hesitant,” citing inflation, fuel costs and general uncertainty. Home Depot reaffirmed its full-year guidance rather than raising it, the same flat-to-2% comparable-sales band it set in December.
Four venues, four audiences, one unmoving word. Each time, the framing does the same work: it locates the problem in the buyer’s head rather than in the price of the house. That kind of message discipline is not dishonest. Executives are not obligated to invent new vocabulary for an unhappy customer every quarter. But repetition has a cost: a phrase that gets reused as an explanation stops getting checked as one, and by the fourth repetition, reporters covering the earnings beat were transcribing it rather than testing it.
The Population That Was Supposed to Be Waiting Is Shrinking
McPhail’s framing rests on a specific mechanism, even when he doesn’t name it: homeowners who refinanced or bought during the ultra-low-rate window are staying put rather than trading a 3% mortgage for something closer to 7%, so supply and turnover stay artificially thin. Economists call it the lock-in effect, and it is real. Academic estimates put its drag at more than a million fewer home sales nationally and roughly 5 to 6% in added home-price appreciation that would not otherwise exist.
Here is the part nobody covering the earnings call checked. Redfin has tracked the mortgage-rate distribution of US homeowners every quarter, and the trail runs the opposite direction from the excuse. In the third quarter of 2024, 17.1% of mortgaged homeowners carried a rate of 6% or higher. By the second quarter of 2025 that had climbed to 20.3%. By the third quarter of 2025, Redfin’s count put it at 21.2%, against just 20% of homeowners still under 3%. That was the first time in five years more homeowners sat above 6% than below 3%. The last time it happened was the third quarter of 2020, before the pandemic refinancing wave even peaked.
Run that against Home Depot’s own timeline. The population actually holding the ultra-cheap rate that supposedly explains everyone’s hesitation has been shrinking every single quarter Home Depot has repeated the word frozen. If lock-in alone were driving the stall, the freeze should be thawing exactly as fast as that group disappears. Instead, existing-home sales fell another 1.7% in July to a seasonally adjusted annual rate of 4.05 million units, one of the weakest prints of the cycle. The excuse and the outcome are now moving in opposite directions, and nobody at Home Depot, CNBC or the wire services covering the earnings beat has had to reconcile the two.
There is a more uncomfortable explanation sitting underneath the comfortable one. If the group anchored to old rates keeps shrinking while turnover keeps falling anyway, the binding constraint is not nostalgia for a 3% rate. It is that 6.7% mortgages on today’s home prices simply do not clear at the incomes most buyers bring to the table, sub-3% comparison or not. That is not a psychology problem that fades as old rates roll off. It is a math problem that gets worse the longer prices hold and wages do not catch up, which is a story about who set those prices in the first place and who benefits from calling the result “hesitancy” instead of unaffordability.
The people actually stuck are not the ones with a cheap mortgage weighing whether to give it up. They are the ones who never got one: first-time buyers priced out during the 2021 run-up who now face both a higher rate and a higher purchase price than anyone who bought before them, with no old rate to compare against and lose. Lock-in has a natural expiration date, because everyone holding a 3% loan eventually sells, refinances or dies. Unaffordability does not expire on its own. Treating the two as the same problem lets everyone involved, from the lenders who priced credit at near zero in 2021 to the builders who set list prices against that credit, wait out a psychological phase that was never going to end the freeze by itself.
Home Depot has genuine reasons to prefer the softer framing. “Frozen” implies a thaw is coming and a rate cut could still trigger it. A structural affordability gap implies the company’s core growth engine, the housing turnover that funds kitchen remodels and roof replacements, may not return to its old form even after rates eventually ease. One story keeps investors patient. The other asks them to rethink the model. McPhail is not lying when he says buyers are hesitant. He is choosing which layer of the problem to describe out loud, and Wall Street has let him choose it four times running without pushing on the arithmetic.
None of this happened while Home Depot’s usual public face was available to answer for it. Ted Decker took a medical leave of absence on August 12, six days before the earnings call, with the company saying it expects him back within months. Senior EVP Ann-Marie Campbell has taken over daily operations and McPhail has absorbed the financial and Pro-business oversight, which is part of why it has been his voice, not Decker’s, delivering the housing diagnosis on every recent call. Nothing about that transition changes the numbers. It does mean the company’s most repeated talking point of the year is now being carried by the one executive with the clearest incentive to keep using it.
Redfin publishes its next mortgage-rate count this fall. If the share of homeowners above 6% keeps climbing and Home Depot’s comparable sales in housing-sensitive categories still will not move, the company is going to need a different word than frozen, because the one it has been using describes a population that is disappearing faster than the problem it is supposed to explain.