US President Donald Trump’s 25% tariffs on building materials sourced from Canada and Mexico could make homes more expensive and disrupt the already-strained housing market. The tariffs will increase the cost of construction, discouraging new development and driving up home prices.
About 30% of softwood lumber consumed in the US is imported from Canada, while wallboard (gypsum) comes primarily from Mexico. The tariff on Canadian goods is expected to raise costs by over 39%, while Mexican goods will be affected for a month before potentially increasing costs further. Home prices have already surged more than 40% since the pandemic started and were up 3.8% in November compared to the previous year.
The National Association of Home Builders (NAHB) has asked Trump’s administration to exempt building materials from the tariffs, citing its commitment to expanding housing supply. However, builders say they will still be affected, impacting consumers’ ability to buy homes in the short term. The NAHB estimates that new duties on imports could raise construction material costs by $3 billion to $4 billion.
The impending tariffs are also affecting the labor market, with about 30% of construction workers estimated to be immigrants. As undocumented immigrants face deportation, builders warn that they will struggle to complete projects and pass on increased costs to consumers. The impact of the tariffs on the existing market is expected to be significant, as higher consumer goods prices will reduce potential buyers’ ability to save for down payments.
With interest rates already rising due to inflation concerns, and now facing a new challenge from US trade policies, the upcoming spring market may face significant headwinds.
Source: https://www.cnbc.com/2025/02/03/trump-tariffs-news-construction-and-home-costs-could-rise.html