Home Depot shares climbed nearly 4% on Friday, making the home improvement giant one of the best performers in the Dow Jones Industrial Average. The rally came as investors grew increasingly optimistic that the Trump administration's ambitious housing affordability plan could reignite a frozen housing market and send homeowners streaming back into Home Depot's aisles.

Shares closed at $373.44, up $13.65 on the session. The move pushed Home Depot closer to the upper end of its 52-week range of $326.31 to $426.75, as traders bet that fundamental demand for home improvement spending may be about to inflect higher.

The Policy Catalyst

The spark came from President Trump's announcement earlier this week that the federal government would use approximately $200 billion in cash reserves at Fannie Mae and Freddie Mac to purchase mortgage-backed securities. The goal is straightforward: drive mortgage rates below 6% and break the so-called "lock-in effect" that has paralyzed existing-home sales for nearly two years.

Currently, tens of millions of American homeowners hold mortgages with rates at or below 4%, locked in during the historically low-rate environment of 2020 and 2021. With current mortgage rates hovering around 7%, these homeowners have little financial incentive to sell their homes and take on a significantly more expensive new loan. The result has been a severe shortage of existing homes on the market.

"Lower borrowing costs would encourage more homeowners to list, more buyers to move, and a surge in move-in and renovation projects that typically funnel spending directly to Home Depot's aisles."

- Benzinga analysis

Why Home Depot Stands to Benefit

Home improvement retailers like Home Depot and Lowe's have historically shown strong correlation with housing market activity. When existing-home sales rise, so does spending on renovations, appliances, and DIY projects. New homeowners typically spend thousands of dollars in the first year of ownership on paint, flooring, yard improvements, and appliance upgrades.

The current housing freeze has dampened that spending. While Home Depot has maintained profitability through operational efficiency and commercial sales growth, the residential side of the business has been sluggish. A return to more normal housing market activity could provide a meaningful lift to same-store sales.

Additional Policy Tailwinds

Beyond the mortgage bond initiative, Trump has also reiterated support for restricting large institutional investors from purchasing single-family homes. The policy aims to reduce competition for first-time buyers, who often find themselves outbid by well-capitalized corporate landlords like Invitation Homes and American Homes 4 Rent.

If implemented, the restriction could tilt the market back toward individual homeowners who historically spend more heavily on home improvements than institutional landlords focused on minimizing maintenance costs.

The Bull Case for Home Depot

Analysts who follow the stock have grown incrementally more bullish in recent weeks. The combination of potentially lower mortgage rates, pent-up housing demand, and policy support for individual homebuyers creates a favorable backdrop for Home Depot's fiscal 2026 outlook.

The company's strategic positioning also helps. Home Depot has invested heavily in its professional contractor business, which tends to be more resilient than consumer DIY spending during economic uncertainty. The ProXtra loyalty program now counts millions of professional members who purchase building materials, tools, and supplies in bulk.

Risks to Consider

Not everyone is convinced the rally has legs. Skeptics point out that the $200 billion mortgage initiative, while large, may not be sufficient to move the needle on rates in a $13 trillion mortgage market. The bond purchases would need to create sustained downward pressure on borrowing costs, not just a temporary dip.

Additionally, even if rates do fall, it may take time for homeowners to adjust their expectations and decide to list. The psychological anchor of their existing low-rate mortgage is powerful, and a decline to 5.75% may not be enough to trigger a wave of selling.

Technical Picture

From a technical perspective, Friday's move was significant. Home Depot has been consolidating below its 52-week high of $426.75 since late 2025. If the stock can sustain its current trajectory and break above the $374-$375 resistance zone, technicians say it could open the door to a test of those prior highs.

Volume was elevated on Friday, suggesting institutional participation in the rally rather than just retail enthusiasm. Large investors appear to be positioning for the possibility that housing market dynamics could shift meaningfully in 2026.

The Bottom Line

Home Depot's Friday surge reflects genuine optimism that the American housing market may finally be approaching an inflection point. If the Trump administration's mortgage initiative succeeds in lowering borrowing costs, it could trigger a cascade of home sales, move-in spending, and renovation projects that would benefit Home Depot directly.

For investors, the stock represents a leveraged bet on housing market recovery. Those who believe policy intervention can break the lock-in effect may find Home Depot an attractive way to express that view. Those who are skeptical that rates can fall enough to matter may want to wait for more evidence before jumping in.