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The National Association of Home Builders (NAHB) estimates that Trump's tariffs could increase prices by $7,500 to $10,000 per new single-family home. The trade group said the estimate is based on reports from members planning for tariff-related price hikes.
Trump imposed a 25 percent tariff on Canadian and Mexican goods on Monday, Mar. 4, as well as 20 percent duties on Chinese imports. Two days later, he announced the tariffs would be paused for products covered by the US-Mexico-Canada Agreement until Tuesday, Apr. 2.
That delay gives homebuilders some time but concerns are growing over the long-term impact on construction costs.
"Canada, Mexico and China are America's three largest trading partners," the NAHB said. "If the new tariffs on Mexico and Canada go into effect next month (the tariffs on China have already been imposed), they are projected to raise the cost of imported construction materials by more than $3 billion."
A 25 percent tariff on steel and aluminum imports took effect on Wednesday, Mar. 12. Trump has also continued to threaten Canada and the European Union with additional tariffs.
Canadian softwood lumber, a key material for home construction, is already taxed at 14.5 percent and would jump to 39.5 percent if Trump's new tariffs take effect. The Department of Commerce has also indicated plans to double the existing tariff later in 2025, potentially pushing it above 50 percent.
D.R. Horton said about 20 percent of its lumber comes from Canada, CNBC reported. The Texas-based firm is one of the largest homebuilders in the US.
Jessica Hansen, head of investor relations at D.R. Horton, said the company has tried to rely less on Chinese suppliers since the COVID-19 pandemic but could still face higher costs on materials from Mexico.
"[There's] really no way to proxy what that could ultimately cost but we'll navigate it like we do anything," Hansen said at a Barclays conference in February. "If we've got a cost category that's inflating and we're in a gross margin compressing environment, we're going to renegotiate anything and everything that we can."
Builders who rely more on US-made products could also see price increases, according to Robert McGibney, chief operating officer for K.B. Home. While McGibney's company gets most of its materials in the US, tariffs can still drive up costs of American-made products as competitors turn to domestic suppliers.
Economists say tariffs could increase homebuilding costs between 6 and 14 percent, with Trump's proposed mass deportations likely causing even greater increases for border states due to a reduced workforce.
"When you look at some of the policies — tariffs, immigration, interest rates — all of these disproportionately negatively impact our industry," housing data provider Zonda's chief economist Ali Wolf told CNBC.
The housing market is already under pressure, with home prices reaching record highs and sales declining. In January, the median home price climbed 4.8 percent year-over-year to $396,900, marking the highest ever for any January, according to the National Association of Realtors.
The Northeast saw some of the sharpest shifts, with sales falling 5.7 percent month-over-month while prices surged 9.5 percent to $475,400.
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