High-end home furnishings retailer RH (RH 2.28%) (formerly known as Restoration Hardware) has done the unthinkable by surviving the slow demise of America's malls, and then the pandemic. It's found a way to keep its customers spending in an economy where it's been tough to do so.

If you think the company is going to be able to maintain its pandemic-related sales growth, however, you might want to reconsider. That era was marked by unique economic circumstances that might not materialize again anytime soon.

So current and would-be RH investors should consider the possibility this stock is dead money for at least the next three years.

Consumers are clearly struggling

Sales and earnings for the company were bumped around at the onset of the pandemic, but before that, revenue was growing. It outright soared during and because of the pandemic with cash-rich consumers using their free time to upgrade their home furnishings. Strong home sales themselves were also a key growth driver during this period as consumers took advantage of ultra-low interest rates.

A great deal has changed just within the past year and a half, however. Chief among them are interest rates. In step with the fed funds rate rising from nearly zero in late 2021 to a multiyear high of 5.3% now, mortgage rates are now higher than they've been in over 20 years.

And that sent sales of new homes plunging 9% in August, according to the U.S. Census Bureau. The National Association of Realtors reported sales of existing homes fell more than 15% year over year that same month, nearing the multiyear low seen in March 2020 when pandemic lockdowns stifled sales.  

With much of the demand for redecorating already satisfied and home sales cratering, there are few drivers left for rekindling sales growth at RH.

In the meantime, consumers are just plain-old struggling. The Federal Reserve says total household debt in the U.S. reached a record-breaking $17.06 trillion as of the second quarter with $1 trillion of that being credit card debt that's becoming increasingly difficult to handle.

The Fed also says delinquencies on credit cards reached a multiyear high of nearly 2.8% of loan balances in the second quarter. While still low by historical standards, the trajectory of this delinquency rate is troubling.

And CEO Gary Friedman of RH isn't dismissing the headwind. He conceded during the second-quarter earnings call, "We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs and the current outlook for rates to remain unchanged until the second quarter of 2024."

Friedman doesn't see home sales picking up until either interest rates or home prices go down. That's a clear problem for RH's foreseeable future.

Even the bullish arguments are still flawed

There are some bullish arguments to be made (particularly in light of RH stock's 40% retreat from its late-July high). For instance, RH's core customers -- the fairly affluent -- might not be feeling as financially pinched as the average shopper is at this time.

Federal Reserve data suggests the wealthiest 20% of Americans are still sitting on at least as much cash now as they were before the pandemic, even though the other 80% are technically poorer.

Similarly, the Saks Luxury Pulse spending barometer says 58% of consumers intend to spend as much or more on high-end goods within the next three months as they have of late. That's up from April's reading of only 53%, and the planned increase in luxury spending is even more dramatic among households earning more than $200,000 per year.

Even so, the numbers come with a big grain of salt. A bunch of affluent households are still trading down in an effort to make the most of their weakening dollar. Since last year, value-oriented retailer Walmart has been touting that most of its sales growth is coming from customers living in households earning more than $100,000 per year.

Would-be RH customers might be feeling more fiscal strain than the retailer's management fully appreciates.

The economic underpinnings of this strain aren't rooted in short-term headwinds, either. Interest rates are apt to remain high for the foreseeable future; home sales are also likely to remain crimped for a long while. And any high-end consumer in the mood for a major redecoration has probably already completed that project during the pandemic, when there was little else to do.

RH stock is too risky and will be for the foreseeable future

Curiously, analysts still like RH stock. Most of them rate it as a hold or better, and they have a consensus price target of $357.80 versus the stock's present price near $240. They're also calling for top-line growth of nearly 8% next year to offset this year's 14% decline, driving per-share profits up from an expected $9.96 to $14.50 next year. No investor should simply dismiss this collective optimism.

Nevertheless, investors should also appreciate the fact analysts can be wrong -- if not about a company's future, then at least about the pace of its growth and/or recovery. So tread lightly here, if you dare tread at all. RH stock could easily be where it is right now in 2026. It could take that long for RH's customers to fully regroup, and for the company to regroup with them.