Planning to purchase a new home or undertake home improvement projects? Get ready to pay more due to tariffs imposed by the Trump administration on imported goods from Canada, Mexico, and China. These tariffs are already causing an increase in the cost of building materials used in new construction and remodeling projects, with estimates suggesting they could add $7,500 to $10,000 to the cost of building a single-family home in the U.S.
The National Association of Home Builders predicts that these increased costs will likely be passed on to homebuyers, potentially dampening demand in an already sluggish housing market where builders are offering costly incentives to attract buyers. Companies like We Buy Houses in San Francisco are already bumping up prices on renovated properties by 7% to 12% despite stockpiling more Canadian lumber to save on costs.
The uncertainty surrounding the duration of these tariffs presents a significant challenge for businesses in the industry. The timing of these tariffs is particularly unfortunate as they coincide with the peak season for home sales, prompting concerns about the impact on the economy and consumer sentiment.
The rising costs of building materials, including lumber, have led to price hikes for construction projects. Suppliers like JC Ryan are feeling the pinch, with tariffs adding significant amounts to their costs and ultimately impacting customers. As prices continue to rise, builders may face tough decisions on whether to pass on these higher costs to consumers, resulting in increased home prices, or to scale back on materials, potentially leading to smaller homes.
Despite efforts to find alternative sources for materials, such as imported lumber from Canada, some businesses like Better Place Design & Build in San Diego are still facing price increases of around 15%. The outlook remains uncertain for the industry as businesses navigate the impact of tariffs on their operations and pricing strategies.
The individual mentioned that he also has 8% fewer job opportunities lined up compared to last year. He expressed concerns about the upcoming year, noting that while he is not on the verge of going out of business, it appears to be a slow and costly period for his company.
The Trump administration recently announced a one-month delay on imposing 25% tariffs on specific imports from Mexico and Canada, such as softwood lumber. Additionally, tariffs of 20% on imports from China have already been enforced. On March 12, a 25% tariff on steel and aluminum imports, including a 50% tariff on those from Canada, came into effect.
The National Association of Home Builders (NAHB) estimates that tariffs on Mexican and Canadian goods set to take effect next month will increase the cost of imported construction materials by over $3 billion. This is in addition to the 14.5% tariff on Canadian lumber imposed by the U.S., resulting in a total tariff of 39.5% on Canadian lumber.
Despite recent stock market disruptions and concerns about the economic impact, President Donald Trump reaffirmed his plans for tariffs on April 2 while aboard Air Force One. He emphasized the significance of this date for the country, aiming to regain wealth lost due to past administrations’ decisions.
Overall, building materials costs have risen by 34% since December 2020. Builders heavily rely on imported raw materials, appliances, and various components, with approximately 7.3% of these products used in construction being imported. Nearly a quarter of these imports come from Canada and Mexico, which account for 70% of key home construction materials such as lumber and gypsum.
The tariffs are expected to lead to higher prices for home improvement products, impacting consumers. The uncertainty surrounding the tariffs’ timing and effects on the economy could have a more substantial negative impact on the new-home market than price increases.
The unpredictability resulting from the administration’s tariff policies may lead to increased volatility in home sales and construction this year, according to the NAHB’s chief economist. The consequences of higher building materials costs are likely to be felt in the future, affecting decision-making in the housing market.
Notably, Slutsky Lumber in Ellenville, N.Y., has already observed a decrease in spring preparations by customers due to the impact of tariffs. Co-owner Jonathan Falcon noted a change in customer behavior, with fewer individuals gearing up for the spring season compared to previous years.
“Falcon is concerned about reducing expenses. He is also apprehensive that smaller businesses, such as his own, will struggle to cope with the effects of the tariffs. He expressed, ‘This is another challenge that will hit small lumber yards harder than larger corporations, pushing businesses like ours to the brink.’ – With contribution from reporter Anne D’Innocenzio.”
