According to Raymond James, pause Home Depot for now. Analyst Bobby Griffin downgraded Home Depot stock to underperforming the market, predicting next year’s challenges for the housing sector. “Our change of view is not a reflection of (stable) Home Depot performance, but rather our view that the risk/reward for HD in 2023 now appears to be more balanced, with ongoing risks/headwinds for the US housing industry and stocks recovering well from 2022 lows,” Griffin wrote in a note Wednesday. “While we don’t forecast a significant earnings revision (base case up ~2% y/y), we are concerned that transactions could remain negative into 2023. (slowing down sequentially from base year 2019), leading to comparable selling pressure, especially as inflation is favorable to offset some reduction (average ticket growth has been the recent driver of the comps),” Griffin added. Home Depot posted better-than-expected results for the third quarter on Tuesday, while reaffirming its full-year outlook. Market participants worry that rising costs could cut back on home improvement and do-it-yourself projects and affect company results. Regardless, the analyst thinks Home Depot will have more trouble ahead, as shoppers could reduce spending next year if home prices start to fall, affecting sales. The stock is down nearly 25% this year. It fell 1.2% in premarket trading on Tuesday. “[Any] the possibility of falling home prices… could hamper the return on investment consumers feel on their home after several years of record spending in this category,” Griffin wrote. now trading back to ~18x our forward EPS (up from ~16x, but admittedly still below the historical average of ~20x), we are shelving our recommendation on stock,” he added. However, Griffin said the long-term investment case for Home Depot remains intact, as he expects that the retailer will continue to capture market share from here.—CNBC’s Michael Bloom contributed to this report.