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Appetite for home improvement projects will likely be slow this year, but there are good reasons to expect the slump to be temporary, according to home improvement retailer Lowe's (LOW).

“When you hear these factors combined with trends like the chronic undersupply of homes, the formation of millennial households, the aging of the baby boom generation, and the continued number of people working from home – you can see why we are confident that demand for home improvement will trend upward over time.” “Both homeowners and pros,” Lowe's CEO Marvin Ellison said on the company's fiscal fourth-quarter earnings call Tuesday.

Lowe's comparable sales fell 6.2% in the quarter ended Feb. 2, driven by continued pressure from do-it-yourself customers holding back spending on larger ticket items. Lowe's expects comparable sales to decline 2% to 3% for all of 2024.

Sales of previously occupied homes remain at historic lows, mortgage rates still hover around 7%, and home prices have not cooled, discouraging many from moving or selling.

Because of these factors, the company expects demand for handmade products to come under pressure in the near term, Ellison said. The other part of this equation is the timeline for interest rate cuts by the Fed, which could boost the housing market and, in turn, big ticket purchases at Lowe's.

“While there is growing confidence in a soft landing, there remains a lot of speculation about the timing of expected interest rate cuts in the face of slowing inflation,” Ellison said. “It is also unclear how quickly consumers will react to these changes and how quickly their spending habits will change.”

Some Wall Street analysts don't expect demand for home improvement will rebound this year amid rising mortgage rates and a decline in new construction projects.

“Not 2024, maybe the second half of 2024,” Michael Baker, managing director of DA Davidson, told Yahoo Finance Live (video above). “But we don't want to get too ahead of ourselves yet. We think same-store sales will definitely continue to decline through the first half of the year and perhaps even more in the second half of the year.”