US home builders face a significant increase in costs due to tariffs imposed by President Trump’s administration on Canada, Mexico, and China. The new tariffs will impact various materials used in construction, including lumber, gypsum (used for drywall), and household appliances.
The greatest impact is expected from the lumber industry, with estimated increases ranging from $4,900 per home on average. Roughly a third of US lumber comes from Canada, and domestic producers are likely to raise their prices to match imported supplies.
Lumber futures have risen by 5% in the past week, and dealers are expected to step up purchases ahead of the coming building season, driving prices higher. The Trump administration’s executive order to increase domestic lumber production is seen as a positive move for the industry, but experts warn that it may take up to three years to build new mills.
The tariffs will also affect other materials, including drywall and household appliances. China is the market leader in household appliances, and most drywall used in commercial and residential construction is imported from other countries. The US is now the largest importer of gypsum, with imports totaling $215 million in 2023.
Homebuilders are bracing for rising costs, which could lead to higher home prices. Danielle Hale, chief economist at Realtor.com, notes that while new construction will see the biggest impact, tariffs will change the landscape of the housing market overall, including existing homes.
However, Treasury Secretary Scott Bessent points out that lower mortgage interest rates may offset some of the cost increases, with the average 30-year fixed rate now at about 6.64%. Despite this, the US housing market is still under pressure due to a historically low inventory of homes for sale and falling sales of newly built homes.
Source: https://www.cnbc.com/2025/03/04/how-tariffs-will-hit-the-us-housing-market.html