President Trump’s tariff policies could make American buildings more expensive, according to builders.
The rise in construction materials such as wood, aluminum and steel could add a $9,200 cost to a typical home, based on data from a survey in March, according to new estimates from the National Association of Home Builders (NAHB).
Buddy Hughes, a North Carolina home builder and NAHB chair, said: “Builders continue to face rising building materials costs, exacerbated by tariff issues and other supply-side challenges, including labor and lot shortages.
Several factors are driving the costs of building or repairing a home, according to the trade group. While US tariffs on imports from Canada, Mexico and China have pushed material costs up, Trump’s trade threats surprise market volatility and reluctantly accept home developers and home buyers to assume financial risks.
The uncertainty about when US taxation will be effective and how long it can last is that real estate developers are reluctant to commit to new projects, preventing them from building their homes. Many home buyers are on the sidelines due to rising mortgage interest rates, but now face higher costs due to tariffs.
Greg Kraut, co-founder and CEO of KPG Funds, a New York-based real estate design and development company, said these concerns are weighing on the housing industry.
“Taxes are causing indecision in the market and eroding trust, leading to people who have not leased or built homes by developers,” he told CBS MoneyWatch.
Material costs have already risen, he pointed out. Confidence of fragile consumers And confusion about the form of tariffs takes leads to indecisiveness.
There is little demand for fixer uppers
Kirsten Jordan, a real estate agent in New York City, said buyers are drawn to a fully built and ready home “to lock in housing costs before everything gets more expensive.”
In contrast, it is a difficult time for a seller to sell the so-called fixer upper, and renovations can be more expensive than usual.
“Customer premiums are a difficult medicine to swallow, as fixer upper buyers are often price-conscious at the start,” she said.
Dana Schnipper, a partner at JC Ryan, building materials supplier in Farmingdale, New York, has obtained wooden doors and frames for an apartment in Nassau County, Canada, from a Canadian company that is cheaper than comparable US costs.
Half of the work is already offered. However, once the tariffs are in effect, it will be applied to the remaining $75,000, adding $19,000 to the total at-cost. When JC Ryan applies the markup, it means that customers will be $30,000 more than originally planned, Schnipper said.
Bar Zakheim, owner of Better Place Design & Build, a San Diego contract business, is the best source of timber, according to Canada.
But by sticking to imported wood, Zaheim had to raise prices by around 15% compared to a year ago, he told The Associated Press.
“I’m not going to go out of business, but I’m looking for a slow, expensive year for us,” he said.
Still, Kraut points out that there is a limit to the amount of home builders who can raise prices to offset their costs. “You only get through to consumers. If Walmart, Target, or home builders say they can’t afford these prices, they say you need to lower the price of the wood coming out of Canada, or we’re not going to buy it.”
After Trump provided a month’s reprieve from duties on US imports from Mexico and Canada earlier this month, NAHB warned that taxation would “make it difficult for builders and their customers to proceed with new construction projects.”
In the meantime, the group said it was working to boost domestic timber production. Currently, more than 70% of imported coniferous wood comes from Canada, but the same share of plaster used in drywall comes from Mexico.
I contributed to this report.
