The National Association of Home Builders
says new tariffs could increase material costs for the average new home by $7,500 to $10,000, making housing even less affordable.
Lumber from Canada, drywall from Mexico, and steel and aluminum from China are all getting hit with higher taxes, raising overall construction costs by more than $3 billion if the full 25% tariffs go into effect. Homebuilders like D.R. Horton and K.B. Home are already feeling the pressure, with supply chains shifting, costs rising, and investor confidence shaking. The SPDR S&P Homebuilders ETF is down 22% since November.
Meanwhile, analysts say border states could take another hit if the government’s deportation plans shrink the construction workforce. While some builders like the deregulation part of government policies, they’re not thrilled about higher costs and supply chain chaos.
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THE U.S. IS SHORT 3.8 MILLION HOMES
The U.S. housing market needs 3.8 million more homes to meet buyer demand, and at the current pace, builders won’t catch up for at least 7.5 years, according to a Realtor.com report.
The U.S. housing market needs 3.8 million more homes to meet buyer demand, and at the current pace, builders won’t catch up for at least 7.5 years, according to a Realtor.com report.
While 2024 marked the first time since 2016 that construction outpaced new household formation, it’s still not nearly enough to fix the housing shortage. A major roadblock? Zoning laws, especially single-family zoning, which restricts the construction of multifamily or affordable homes, despite calls from economists to change the rules.
Some argue that easing restrictions could boost supply and lower costs, while others warn that zoning reforms could have unintended long-term effects on affordability. Either way, with builders still playing catch-up from the 2008 crash, home prices aren’t coming down anytime soon.
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