Nov. 17 (Bloomberg) -- Home Depot Inc., the largest U.S. home-improvement retailer, posted third-quarter profit that fell as customers spent less and made fewer purchases.

Net income dropped 8.9 percent to $689 million, or 41 cents a share, in the three months ended Nov. 1 from $756 million, or 45 cents, a year earlier, the Atlanta-based company said today in a statement. Analysts projected profit of 36 cents, the average of 27 estimates compiled by Bloomberg.

Home Depot reduced selling, general and administrative expenses by 8.4 percent to $3.87 billion. Customer transactions at the company, led by Chairman and Chief Executive Officer Frank Blake, slowed amid sinking home values and the highest U.S. unemployment in 26 years.

Profit beat analysts’ estimates on “impressive cost controls,” David Strasser, an analyst at Janney Montgomery Scott LLC in New York, wrote today in a note to clients. Strasser, who recommends buying Home Depot shares, cited lower advertising costs and technology that helped individual stores control expenses.

Sales fell 8 percent to $16.4 billion as the value of the average transaction dropped 7.1 percent to $51.89 from $55.86. The number of customer transactions slipped to 314 million from 315 million, Home Depot said.

Home Depot declined 40 cents, or 1.4 percent, to $27.25 at 8:01 a.m. before the start of New York Stock Exchange composite trading. The shares have advanced 20 percent this year.

Store Openings

The retailer opened two stores in the third quarter, down from three in the second quarter and five in the first quarter, Paula Drake, a company spokeswoman, said today in an e-mail. The company said in February it planned to open 12 stores this year.

Home Depot predicted adjusted earnings per share for the year of $1.55, a decline of about 13 percent from the previous year, compared with an earlier prediction of a decrease of as much as 20 percent.

Capital expenditures fell 52 percent to $215 million from $451 million a year earlier.

U.S. payrolls fell by 190,000 in October and the jobless rate jumped to 10.2 percent, topping 10 percent for the first time since 1983. Concern about jobs and income pushed consumer sentiment down to a three-month low in November, according to a report from Reuters/University of Michigan last week