Home Depot Pro customers face tighter margins as construction momentum builds
Pro demand is firmer, but contractor margins are still getting squeezed by labor gaps and faster-rising material costs. That means more tactical buying at the Pro desk and tighter pressure on store execution.
Associated Builders and Contractors’ Construction Backlog Indicator reached 9.1 months in May. Home Depot’s Pro customers are walking into a better market that still feels unforgiving. Backlog is improving and construction activity is picking up, but contractors are dealing with labor shortages and input costs that keep rising faster than their bids can fully absorb. For store associates, that shows up in smaller, more deliberate orders, more questions about substitutions, and a sharper focus on keeping jobs moving without delay.
Backlog is improving, but the recovery is not frictionless
The Construction Backlog Indicator was up 0.3 months from April and 0.7 months from May 2025.
A fuller project pipeline usually means more repeat business, more phased deliveries, and more pressure on fulfillment teams to keep special orders accurate. A contractor with work in hand is less likely to stop spending, but more likely to break a project into pieces, buy only what is needed for the next stage, and keep a close eye on whether the next load arrives complete. That makes inventory confidence and clear communication just as important as traffic counts.
Input costs are still moving faster than contractor pricing power
ABC’s May data showed construction input prices rose 2.6% from the previous month and nearly 10% from a year earlier. Nonresidential construction input prices rose 2.4% month over month.
AGC’s latest pricing update showed construction input prices were up 8.4% year over year, the highest annual increase since 2021, while contractors’ bid prices rose only 3.5%. That gap leaves tighter margins, which is why value conversations at the Pro desk are becoming more tactical rather than merely promotional. When the cost of what goes into a job rises that quickly, a contractor may compare brand tiers more carefully, look for substitute materials that still meet the spec, or ask for advice on products that reduce labor time and cut a return trip.
AGC also found inputs to new nonresidential construction rose 1.7% in April and 6.6% from April 2025. Even a healthy-looking market can still produce cautious buying behavior. A contractor may have work booked, but if the job budget is already stretched by material inflation, every trip to the store becomes a margin decision.
Labor shortages are changing how projects get built
Home Depot’s Pro Forecast in February projected the construction labor market to stay tight in 2026, and its April update said high demand for skilled labor continues to drive the market. Residential builders are competing for a limited pool of Pros, while workers are being pulled toward large infrastructure and data center projects.
Crews that are short-handed buy differently. They push harder for complete material lists, faster fill rates, and fewer back-and-forth conversations about backorders. They also tend to value products that save labor on the jobsite, whether that means easier installation, fewer steps, or less rework. For department leads and store managers, that makes product knowledge a service issue, not just a merchandising issue.
A contractor with fewer hands on the crew often needs tighter coordination from the Pro desk, specialty sales teams, and fulfillment groups. If the material list is incomplete or substitutions are unclear, the project slows down immediately.
What Pro customers are likely to do inside the store
The combination of firmer demand, cost pressure, and labor scarcity changes buying behavior in predictable ways. Pros may split orders instead of taking full loads at once. They may ask more questions about what is actually on hand, not just what can be ordered. They may compare product tiers more aggressively, especially when a job needs to stay within a fixed bid.
They also become more sensitive to products that reduce risk on the schedule. A jobsite-saving item is not just a convenience when crews are stretched thin, it can be the difference between finishing on time and paying for another day of labor. Reliable sourcing, fast pickup, and clean communication on substitutions carry more weight in the Pro business right now.
A steady demand environment does not automatically translate into easy sales. The customer may be busy, but the buying process is more guarded. Every delay, backorder, or unclear alternative can turn into a lost hour on the jobsite and a harder conversation at the counter.
Home Depot already has a labor response in place
Home Depot Foundation’s Path to Pro program is the company’s long-running response to labor shortages. The program launched in 2018 with a $50 million commitment to train skilled tradespeople. It supports the pipeline of workers contractors need and gives associates a concrete way to talk about Home Depot’s role in the broader trades ecosystem.
For employees, the connection is straightforward. The same market that makes customers more selective also makes skilled-trades knowledge more valuable in the aisle and at the Pro desk. If the customer is trying to protect margin while keeping a project moving, the associate who can steer them toward the right material, the right substitute, or the right fulfillment option becomes part of the solution.
This article was produced by Prism’s automated news system from verified source data, official records, and press releases, then run through automated quality and moderation checks before publishing. The system is built and supervised by the people who set the standards it runs under. Read our full AI policy.
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