How tariffs could affect America’s new homes market - RealEstate Content

How tariffs could affect America’s new homes market

The impending imposition of a 25% tariff on all steel and aluminum imports has sent ripples of concern across our housing and construction industry.

Tariffs placed on eight countries plus the 27 members of the European Union are to take effect on March 12, 2025.

They could significantly impact the cost of home construction and have a detrimental impact on the supply of homes, according to building industry insiders. 

And there could be a flow-on effect for the new homes currently being built.

Like many other nations, America is also facing a shortage of affordable homes.

Homebuilders are particularly worried that increased material costs could lead to a slowdown in new construction, further driving up home prices and making homeownership even less attainable.

Home building across America is currently having a resurgence. The website Trading Economic reported that housing starts rose 15.8% from the previous month to a seasonally-adjusted, annualized rate of 1.515 million units in December of 2024 – the most since March 2021. 

It’s the highest number of starts since last February 2024, and it’s above the market expectation of a 1.32 million increase. 

Severe weather adversely affected the January data. Housing starts in the slumped 9.8% month-over-month to an annualized 1.366 million in January, down from December’s 10-month high of 1.515 million.

Tariffs on essential materials like steel and aluminum, crucial components in homebuilding, will directly inflate costs for builders dependent on imports. 

Major suppliers, including Canada, Brazil and Mexico, will have tariffs placed on their steel and aluminum. Under global trade rules, it will be paid by the importer, who in turn is expected to pass on the increased prices to the US-based consumer. 

While acknowledging the concerns of the housing industry, the Trump administration maintains that these tariffs are necessary to protect domestic industries and reduce reliance on foreign nations for critical materials.

The National Association of Home Builders (NAHB) has expressed concern. It believes the policy position has the potential to raise home prices and hinder new construction. It’s advocating for tariff exemptions on building materials. It said it would work with the White House to promote housing affordability.