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Home Depot’s sales dropped 2% during its latest quarter as consumers took on fewer major home projects. Still, Warren Buffet is betting big on home builders.

“We did see continued pressure in certain big-ticket, discretionary categories,” Home Depot CEO Ted Decker said in a news release Tuesday.

Home Depot

(HD) is a closely watched barometer for the housing market.

Americans feel lousy about housing. Only 18% said it was a “good time to buy” according to July’s Home Purchase Sentiment Index from Fannie Mae, matching an all-time low. People continue to attribute the challenging housing conditions to high home prices and unfavorable mortgage rates.

Spending on home improvement during the pandemic – between 2020 and 2022 – grew at an outsized pace due to a combination of a home buying frenzy and people’s need for improved space as they stayed at home. Ample household balance sheets, plus price inflation in home improvement goods and services, boosted Home Depot and others.

But American consumers have recently dialed back on discretionary spending, including home improvement purchases.

The company stuck to its full-year guidance, expecting sales this year to decline up to 5% compared to last year. Home Depot’s stock ticked up slightly during early trading.

Warren Buffet’s Berkshire Hathaway

(BRKA) made a big bet on US home builders last quarter, however. The company disclosed new stakes in Lennar

(LEN), D.R. Horton

(DHI) and NVR

(NVR) in a securities’ filing Monday.

Home builders have been benefiting from a lack of existing inventory on the market, as many existing homeowners have been hesitant to sell because of rising interest rates.

Home builder sentiment had been rising this year, but took a turn and fell in August as mortgage rates climbed toward 7%, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The measure looks at current sales, buyer traffic and the outlook for sales of new construction homes over the next six months.

The drop interrupted seven straight months of an improving outlook, based on the lack of inventory in the existing home market that has been boosting home builder sentiment, even as their costs remain high.