Swimming pool manufacturers in the US are slashing their profit outlooks for the year even as July was officially declared the world’s hottest month on record, a contradiction that illustrates just how vast and profound the fallout from rapid interest rate hikes has been.

All four of the largest US-listed pool stocks have cut their forecasts this year, while analysts have taken an ax to their profit projections. Pool Corp., the world’s biggest pool equipment distributor, has seen its adjusted earnings per share estimate cut by 21% since the start of the year, while pump maker Hayward Holdings Inc. saw a 22% drop, pool builder Latham Group Inc. a 41% cut, and chemical supplier Leslie’s Inc. a staggering 64%.

The gloomy outlooks come as the industry expects construction of new pools in the US to drop as much as 30% from last year, and remodels to fall 25%. A similar drop is expected in Europe. Inflation and record-high interest rates are largely to blame, increasing both sticker prices and financing costs, and deferring upgrades.

Monthly payments have in some cases doubled to as much as $1,400 a month, Pool Corp CEO Peter Arvan said on the company’s recent earnings call, “which simply puts it out of the range for many of the families that would be stretching at, frankly a $700 to $750 level.”

The companies are also facing tough comparisons year-over-year. Pandemic stimulus checks saw consumers dive into home improvement projects like pools during lockdowns, Andrew Carter, a director at Stifel, said in an interview. Pool Corp said as many as 311,000 were built in North America in the past three years.

And most of those pools were entry level, or precisely the type of consumer most hurt by higher financing costs, Carter said. That also further adds to the demand glut for add-ons like new equipment and chemicals.

Still, it isn’t just inflation and rates hurting sales. Cooler weather in the US northeast and increased travel are also crimping demand, as are inventory corrections and supply chain issues.

In New England, for example, a chilly start to the year meant homeowners likely delayed opening their pools for the summer, while Americans’ voracious appetite for travel has diverted discretionary spending outside homes.

The industry and its investors see better times ahead. Pool Corp’s largest supplier, Pentair Plc, expects volumes to bottom in the third quarter. Stock prices have recovered over the past month despite the outlook cuts, and all of the four major pool companies bar Leslie’s are up year-to-date.

Scorching heat across larges swathes of America offers a potential path to recovery, and the pandemic pool-building boom should increase demand in the long term as those new pools drive future replacement and maintenance sales.

High-end pool construction is also a bright spot, with some luxury condos in New York City now installing two to appease residents who want to swim laps and those who just want a relaxing dip. Some large dealers are sold out into next year, Pool Corp’s CEO Arvan said.

Still, Stifel’s Carter sees the overall recovery outlook as “tepid” until residential construction returns to normal levels.