Looking for a new home or considering a kitchen renovation? Be prepared to face increased expenses. The tariffs imposed by the Trump administration on goods from countries like Canada, Mexico, and China are beginning to elevate the costs associated with building materials, crucial for residential construction and remodeling.
According to estimates by the National Association of Home Builders (NAHB), these tariffs could increase the cost of constructing a single-family home in the United States by $7,500 to $10,000. This rise in costs is often transferred to homebuyers, resulting in higher home prices, which could negatively impact demand. This situation comes at a time when the U.S. housing market is already struggling, and builders are forced to offer expensive incentives to attract buyers.
In San Francisco, We Buy Houses, a company dealing with foreclosed properties, has been adjusting its prices on renovated homes, raising them between 7% and 12%. This adjustment comes despite an attempt to hedge costs by increasing their Canadian lumber stock by 62%, saving $52,000 in the process. “The uncertainty regarding the continuation of these tariffs remains the biggest challenge for our planning,” said CEO Mamta Saini.
The timing of the tariffs presents significant challenges for both builders and the home remodeling sector, particularly as this typically marks the peak period for home sales. Concerns about a potential trade war have disrupted the stock market, raising fears about the economy, which could keep potential buyers at bay.
Danielle Hale, a chief economist at Realtor.com, highlights a dilemma for builders facing rising costs due to import tariffs. Builders can either pass on these costs to consumers, inevitably leading to higher home prices, or opt to use fewer materials, which would likely result in smaller homes.
Despite a delay in tariff implementation on some products, prices for building materials are climbing, with lumber futures hitting a two-year peak at $658.71 per thousand board feet as of March 4. The increased costs are already impacting construction budgets. Dana Schnipper, a partner at JC Ryan in Farmingdale, New York, noted that importing wooden doors and frames from Canada for an apartment complex has been more economical than sourcing them domestically. However, with the tariffs coming into effect, an additional cost of $19,000 is anticipated, which when marked up, will cost customers an extra $30,000.
Schnipper predicts that American manufacturers may seize the opportunity to raise prices on steel components as well. “These prices won’t just retreat,” said Schnipper, expressing concern about the long-term financial strain on small businesses and their ability to absorb such costs.
Alternative sourcing to bypass tariffs isn’t always feasible. Bar Zakheim, owner of Better Place Design & Build in San Diego, emphasizes that Canada continues to be a prime lumber source. Consequently, his business has increased project prices by approximately 15%, alongside an 8% decrease in planned jobs compared to last year.
On March 6, the U.S. government announced a one-month delay of its 25% tariffs on certain imports from Canada and Mexico, while a 20% tariff on Chinese imports is already active. Additional tariffs on steel and aluminum, with a 50% rate on Canadian imports, began on March 12.
The NAHB notes that tariffs on Mexican and Canadian imports set to become effective next month will escalate construction material costs by more than $3 billion, on top of an existing 14.5% tariff on Canadian lumber previously enforced by the U.S. This rounds off the total tariffs on Canadian lumber to 39.5%.
President Trump, aboard Air Force One, reiterated his intent to proceed with the tariffs, undeterred by ensuing stock market tumult or economic trepidations. “April 2 is a liberating day for our country,” remarked Trump, emphasizing a view of recouping economic losses attributed to mismanagement by previous administrations.
Data from the NAHB shows that costs for building materials have already soared 34% since December 2020, impacting builders who rely on imported raw materials, appliances, and components. About 7.3% of all materials used in U.S. home construction are imported, with a significant portion coming from Canada and Mexico, including key materials like lumber and gypsum.
Beyond raw materials, Mexico and China also play significant roles in providing numerous home components such as refrigerators, washing machines, and air conditioners, as well as crucial steel and aluminum supplies. The tariffs will inevitably raise costs for home improvement consumers, warns Dent Johnson, president of True Value Hardware.
Uncertainty surrounding the tariffs and their broader economic implications could have a more profound impact on the housing market than merely escalating costs. Carl Reichardt, a homebuilding analyst, highlights the complications for consumers and builders alike when planning becomes difficult amid unpredictable pricing landscapes. Meanwhile, NAHB’s chief economist, Robert Dietz, projects increased volatility in home sales and new construction due to the administration’s policies.
For businesses like Slutsky Lumber in Ellenville, N.Y., the effects are already palpable. Co-owner Jonathan Falcon notes a decline in spring preparations compared to typical years, attributing it to reduced consumer spending. Falcon also raises concerns about how smaller businesses will cope with the new financial landscapes imposed by the tariffs.
