Few areas of the economy look much worse than housing right now. Existing-home sales dropped 8.8% year over year in October, according to the National Association of Realtors, as mortgage rates reached their highest levels since 2000, pushing home sales to their lowest level since August 2010.
You might expect every business tied to the home to be struggling. Yet a couple of leading retail and paint brands are growing right through the slump, making these stocks compelling buys if housing begins to stabilize next year.
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1. Wayfair
Shares of Wayfair (NYSE:W), the online home furnishings retailer, have nearly doubled since its May 19 close and are up 11% this year through Nov. 12. Weak demand for home goods sent the stock down over the past five years, but the business has been gaining strength.
Third-quarter revenue rose 9.7% year over year to $3.4 billion, with U.S. revenue up 11.4%. Operating income nearly tripled to $106 million.
The improvement in profitability stands out. “Over the past two years, we have grown orders faster while spending less on advertising as a share of revenue,” CEO Niraj Shah said on the earnings call.
Orders delivered grew 12.2% in the quarter, while ad dollars rose just 2.4%, pushing advertising down to 9.9% of revenue. Extra holiday marketing will push it back to around 11% of revenue in the fourth quarter. Still, last quarter’s single-digit result shows that Wayfair is building a brand that attracts customers with minimal marketing.
Another positive is market share gains. Wayfair’s U.S. sales are growing faster than the home furnishings market as a whole, a sign it’s taking customers from competitors. Newer initiatives — Wayfair Rewards, Wayfair Verified, its Delivery+ program, and physical stores — are still early in contributing to results, and management believes its share gains can continue to build into 2027 and beyond. When the industry returns to growth, those share gains could contribute meaningfully to revenue growth.
There are still headwinds for Wayfair. International revenue fell 2.3% year over year, and a longer housing slump would likely weigh on its domestic sales. But at about 27 times 2027 adjusted earnings, its valuation looks reasonable, given that adjusted earnings per share climbed 24% year over year in the first nine months of 2026 and management aims to keep growing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) faster than revenue.
