The US housing market had already struggled with the weight of the high mortgage interest, a low range of existing houses for sale and historically high real estate prices.
Now tariffs increase even more pressure on building materials.
About 30% of the soft wood wood consumed in the USA are mainly imported from Canada. Wallboard, known as plaster, is imported from Mexico. The 25% collective bargaining president Donald Trump, who was raised by the two most important trading partners on goods, will make these products much more expensive. The Mexico tariffs were postponed for a month on Monday, but they are still on the table.
“More than 70% of the imports of two essential materials to which house builders rely on come from Canada or Mexico,” wrote Carl Harris, chairman of the National Association of Home Builders, in a publication. “Customs on wood and other building materials increase the construction costs and discourage new development, and consumers ultimately pay the tariffs in the form of higher real estate prices.”
Real estate prices have risen well over 40% since the beginning of pandemic and were still 3.8% higher in November compared to last November. This annual increase was higher in October than 3.6%.
Tasks on building materials could make the market for buyers even more difficult.
“We believe that this could make the affordability crisis for first -time buyers,” Jaret Seiberg, analyst for apartment guidelines for the TD Cowen Washington Research Group. “On the positive side, it could increase the pressure on the congress to enact guidelines that promote more entry -level constructions including extended tax credit programs.”
Potential buyers of homes leave a property for sale during an open house in a neighborhood in Clarksburg, Maryland.
Roberto Schmidt | AFP | Getty pictures
The Nahb asks the Trump government to take out building materials from the 25% tariffs, and determines his executive order on the first day of his presidency, which wanted to “expand real estate supply”.
While the United States has increased wood production in recent years, 70% of the country's sawmill and wood products – 8.5 billion US dollars – come from Canada. They are already subject to a tariff of 14.5%, so Trump's new politics would increase it to over 39%.
And 71% of the product imports of lime and plaster come from Mexico and a total of 352 million US dollars. Other materials such as steel and devices come from China. Trump won an additional 10% tariff on goods from China on Saturday.
New tasks for imports from China, Canada and Mexico could increase the construction documents by 3 to 4 billion US dollars if they all come into force, which the ability of the builders to complete projects, according to the NaHB.
The tariffs will probably hit smaller house builders with stricter edges harder, but large builders are not immune.
“Even if a smaller part of our wood from Canada and some materials comes from Mexico, we will all be affected what consumers and their ability can influence to buy a house at short notice,” said Sheryl Palmer, CEO of the housewife based in Arizona Taylor Morrison. “At a time when some consumers still have difficulty overcoming higher interest rates, my sincere hope is that they will be short -term.”
The builders are already fighting with a lack of work that only deteriorates after the Trump government has started with mass shifts from immigrants without papers. Around 30% of construction workers are estimated to be immigrants, and according to the National Immigration Forum, an immigration lawyer group, a significant proportion of these employees is without papers.
“You can all lead them outside the country, but who will build houses?” said Bruce McNeilage, CEO von Kinloch Partners in Nashville, a single-family house developer.
While most of the effects of tariffs are on the new housing, the existing market could also feel the effects. If the costs of other consumer goods rise, all potential buyers have less money to save a down payment.
There was also the expectation that interest rates would decrease this year, but if inflation heats up again due to the tariffs, the tariffs could even rise. This overlay of both economic realities and the emotional perception of personal assets could be difficult to hit the important, impending spring market.