The cost of home construction in the U.S. is expected to rise due to new tariffs imposed by the Trump administration on products from China, Mexico, and Canada. These tariffs will impact the price of goods such as lumber, drywall, appliances, and other finishing materials. The increase in costs could amount to $7,500 to $10,000 per home, according to estimates from the National Association of Home Builders.
The greatest impact is expected to come from the increase in lumber prices, with Canadian imports facing a 25% tax. Domestic lumber producers are likely to raise their prices to match the imported supply. The tariffs will also affect the availability of materials like appliances and drywall, potentially leading to higher home prices or smaller homes.
In response to the tariffs, the Trump administration has issued an executive order to increase domestic lumber production, which the homebuilding industry sees as a positive step. However, increasing domestic production is a lengthy process that may take up to three years to build new mills due to limited equipment manufacturers and a shortage of skilled labor.
While the tariffs may lead to rising costs for home construction, lower mortgage interest rates in recent weeks are being touted as a benefit for American consumers. Despite these developments, the U.S. housing market is already under pressure, with record-low signed contracts on existing homes and a drop in sales of newly built homes in January. The tariffs could further impact the housing market by increasing prices for both new and existing homes and hamstringing consumers’ ability to remodel their homes.
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