The company said comparable sales declined 1.3% for the quarter through October, better than what Wall Street analysts were expecting during a time when high interest rates have weighed on the housing market. The company's adjusted earnings were also higher than estimates.

Home Depot said Tuesday that it saw a pickup in demand for seasonal items and supplies for certain outdoor projects, some of which was related to hurricanes that have struck the U.S. in recent months. Warm weather also helped with sales of products like grills, Chief Financial Officer Richard McPhail said in an interview. 

The Atlanta-based retailer said it now expects comparable sales to drop 2.5% for the full year, versus the previous guidance of a 3% to 4% decline. 

The shares rose 2.8% in premarket trading. Home Depot's stock is up nearly 20% year-to-date, suggesting investors are betting on the retailer's long-term potential.  

Many U.S. consumers continue to postpone buying homes or pursuing larger projects that need financing, waiting for interest rates to drop further. 

"Our customers are telling us that they have the demand to do projects like remodeling, but costs of borrowing are still just too high," McPhail said.

Home Depot executives previously said they anticipate more activity when mortgage rates drop toward 6%. The Federal Reserve has cut interest rates, but mortgage rates have so far remained high. 

U.S. retailers currently face an array of challenges: Consumers remain stretched after years of rising prices and have pulled back spending, squeezing some companies' sales. Additionally, this year's crucial holiday season is shorter, with five fewer shopping days than last year. 

President-elect Donald Trump has also said he would impose a 60% tariff on goods imported from China and as much as 20% on items from other countries. That has prompted some companies to change production plans and warn of possible price hikes. 

Home Depot's McPhail said it's too early to gauge the impact of such measures on the business. Home Depot sources most goods domestically and has not heard from suppliers that they are planning changes, he added.

Home Depot, which operates more than 2,300 stores, is the first of the major U.S. big-box retailers to report quarterly results, with data from Lowe's Cos., Walmart Inc. and Target Corp. scheduled to follow in the coming weeks.