ENGLEWOOD CLIFFS, N.J. – The homebuilding industry in the United States is facing challenges as tariffs imposed by the Trump administration on China, Mexico, and Canada are causing prices to soar. These tariffs are impacting various elements of home construction, from lumber to household appliances, with the potential to drive up costs for new homebuyers.
The National Association of Home Builders estimates that new tariffs could add anywhere from $7,500 to $10,000 to the cost of building a new home. These additional costs are primarily driven by increases in lumber prices, which are expected to rise by an average of $4,900 per home. With a significant portion of lumber used in homebuilding coming from Canada, the imposition of tariffs has led to supply chain disruptions and price hikes.
President Trump’s executive order to increase domestic lumber production has been viewed positively by the homebuilding industry, as it aims to address the housing supply crisis in the country. However, ramping up domestic production is not an immediate solution, as it could take up to three years to build new mills due to constraints in manufacturing equipment and labor availability.
In addition to lumber, tariffs on imports are impacting other sectors of the homebuilding industry. The majority of household appliances are sourced from China, while drywall materials are imported from countries like Spain, Mexico, and Canada. Rising costs due to tariffs are forcing builders to consider passing these costs onto consumers through higher home prices or reducing their use of materials, potentially resulting in smaller homes.
While new construction is bearing the brunt of these tariff increases, existing homes may also feel the impact as buyers’ willingness to pay rises amidst a changing housing market landscape. Despite rising construction costs, the Trump administration is highlighting lower mortgage interest rates as a potential benefit for homebuyers, with rates dropping from recent highs.
The tariffs on building materials come at a challenging time for the U.S. housing market, which is already seeing declines in signed contracts for existing homes and sales of newly built homes. These economic pressures, combined with historically low inventory levels, are creating a complex environment for homebuyers and builders alike as they navigate the effects of trade policies on the industry.