President Donald Trump’s administration has imposed tariffs on imports of goods used in U.S. home construction from China, Mexico, and Canada. The increased cost of these materials, including lumber, drywall, appliances, and finishings, could raise builder costs by $7,500 to $10,000 per home. Lumber prices are expected to increase by about $4,900 per home on average, with domestic producers raising prices to match imported lumber supply.
The tariffs have led to uncertainty in the homebuilding industry, with the National Association of Home Builders estimating that every $1,000 increase in the median price of a new home could exclude 106,000 potential buyers. Efforts to increase domestic lumber production may take up to three years due to limited equipment manufacturers and the need for skilled labor in rural areas where mills are located.
In addition to lumber, the cost of imported appliances and drywall is also expected to rise due to tariffs. The U.S. imported $215 million in gypsum in 2023, making it the largest importer of the product in the world. This could lead builders to either raise home prices or build smaller homes to offset increased costs.
While mortgage interest rates have declined in recent weeks, the housing market is already under pressure, with signed contracts for existing homes at record lows and sales of new homes dropping. The impact of the tariffs on home construction costs could further exacerbate challenges in the housing market, leading to higher home prices and potentially limiting consumers’ ability to remodel or buy existing homes.
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