Construction and home cost could rise

The US housing market already fought under the weight of high priority rates, -one Low delivery of existing houses for sale and historically high housing prices.

Now, customs on building materials add even more pressure.

About 30% of the softwood tree consumed in the United States is imported largely from Canada. Wallboard, known as plaster, imported from Mexico. The 25% Customs President Donald Trump, who was charged on goods from the two central trading partners, will make these products so much more expensive. The Mexico tariffs were exposed to a month on Monday, but they are still on the table in the future.

“More than 70% of the import of two important materials that home builders depend on – Softwood Lumber and Gypsum, respectively – comes from Canada and Mexico,” wrote Carl Harris, president of the National Association of Home Builders in a release. “Tariffs on timber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for customs in the form of higher housing prices.”

Home prices have already risen well over 40% since the start of the pandemic and were still 3.8% higher in November compared to the previous November according to the latest reading from the S&P Corelogic Case-Shiller National Home Price Index. The annual increase was higher than 3.6% in October.

Duties of building materials could make the market even more difficult for buyers.

“We believe this can make it worse that the crisis at affordable price for first-time buyers. On the plus side, it could increase the pressure on congress to adopt policies that encourage more construction on entry-level including extended tax credit programs,” wrote Jaret Seiberg, Housing policy analyst for TD Cowen Washington Research Group.

Nahb asks Trump administration to exempt building materials from the 25% tariffs and noticing his executive order on the first day of his presidency trying to “extend the housing supply.”

While the United States has increased a trimate production in recent years, 70% of the country’s sawmill and wood product imports – $ 8.5 billion – come from Canada. They are already subject to a duty of 14.5%, so Trump’s new policy would raise it to over 39%.

And 71% of Lime and Gypsum -Product Import is from Mexico, a total of $ 352 million. Other materials such as steel and appliances come from China. Trump put another 10% duty on goods from China on Saturday.

New tasks on imports from China, Canada and Mexico could raise building material costs by $ 3 billion to $ 4 billion if they all come into force, affecting the builder’s ability to implement projects, according to Nahb.

The tariffs probably hit smaller home builders with tighter margins harder, but large builders are not immune.

“Even with a smaller portion of our timber coming from Canada, and some materials from Mexico, we will all be affected again can affect consumers and their ability to buy a home in the short term,” said Sheryl Palmer, CEO Director of Arizona-based home builder Taylor Morrison. “In a time when some consumers are still struggling to overcome higher interest rates, my sincere hope is that these will be short -lived.”

Builders are already struggling with a shortage of labor that only gets worse after the Trump administration started massage portions of undocumented immigrants. About 30% of construction workers are estimated to be immigrants and a significant proportion of these workers are undocumented, As per the National Immigration ForumAn immigration lawyer group.

“You can drive them all out of the country, but who should build houses?” Said Bruce McNeilage, CEO of Nashville-based Kinloch Partners, a single-family development developer.

While most of the effect of tariffs is on new residential construction, the existing market could also feel the effects. If the cost of other consumer goods increases, all potential buyers will have less extra cash to save on a payout.

There was also an expectation that interest rates would fall this year, but if inflation is heated again due to tariffs, interest could even rise. This layering of both economic realities and emotional perceptions of personal wealth could hit the very important, upcoming spring market hard.