Trump tariffs could add more than $9,000 to cost of a new home, builders say

President Trump’s tariff policies could make building or renovating a home in the U.S. more expensive, according to builders. 

The rising costs of construction materials, including lumber, aluminum and steel, could add $9,200 in costs for a typical home, according to a new estimate from the National Association of Home Builders (NAHB), based on data from a March survey. 

“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” Buddy Hughes, a North Carolina-based homebuilder and chairman of NAHB, said in a statement. 

Multiple factors are pushing the costs for building or fixing up home, according to the trade group. U.S. tariffs on imports from Canada, Mexico and China are driving up materials costs, while Mr. Trump’s trade threats have also stoked market volatility, making housing developers and homebuyers reluctant to take on financial risks. 

Uncertainty around when U.S. levies could take effect and how long they could remain in place is making real estate developers reluctant to commit to new projects, impeding home construction. Prospective homebuyers, many of whom have been sidelined by rising mortgage rates, now also face higher costs due to tariffs.

Greg Kraut, co-founder and CEO of KPG Funds, a New York-based property design and development firm, said such concerns are weighing heavily on the housing industry. 

“Tariffs are causing indecision in the marketplace and eroding confidence, which is leading to developers not leasing or people not building their houses,” he told CBS MoneyWatch. 

Material costs are already elevated, he noted, while fragile consumer confidence and confusion around what form tariffs will take is leading to indecision.

Less demand for fixer-uppers

New York City realtor Kirsten Jordan said buyers are gravitating toward homes that are fully built and move-in ready in order to “to lock in their housing costs before everything gets more expensive.”

By contrast, it’s a tough-time for sellers to market so-called fixer-uppers, which could cost more than usual to renovate.

“The fixer-upper buyer is often more price-conscious to begin with, so the tariff premium is a tough pill to swallow,” she said.

Dana Schnipper, a partner at building materials supplier JC Ryan in Farmingdale, New York, obtained wooden doors and frames for an apartment complex in Nassau County from a Canadian company that cost less than the American equivalent.

Half the job has already been supplied. But once the tariff goes into effect it will be applied to the remaining $75,000, adding $19,000 to the at-cost total. Once JC Ryan applies its mark up, that means the customer will owe $30,000 more than originally planned, Schnipper said.

Bar Zakheim, owner of Better Place Design & Build, a contracting business in San Diego that specializes in building accessible dwelling units, said Canada remains the best source for lumber.

But by sticking with imported lumber, Zakheim had to raise his prices about 15% compared with a year ago, he told the Associated Press. 

“I’m not about to go out of business, but it’s looking to be a slow, expensive year for us,” he said.

Still, Kraut notes there are limits to how much homebuilders can lift prices to offset their own rising costs. “You can only pass through so much to the consumer, and if the Walmarts and Targets and homebuilders say we can’t afford these prices, they’ll say you have to lower lumber prices coming out of Canada or we aren’t going to buy it.”

After Trump earlier this month provided a one-month reprieve from tariffs on U.S. imports from Mexico and Canada, including softwood lumber, the NAHB warned that the levies “will make it harder for builders and their customers to move ahead with new construction projects.” 

In the meantime, the group said it’s working to boost domestic lumber production. Currently, more than 70% of imported softwood lumber comes from Canada, while the same share of gypsum, used for drywall, comes from Mexico.