Amendments and clarification: The story has been updated to clarify that the construction product under discussion is an imported product.
The household – the most expensive item most Americans have ever bought – is likely to be even more expensive if the Trump administration’s proposed tariffs come into effect.
An analysis by John Burns Research and Consulting, focusing on the housing industry, estimates that once the White House proposed tariffs are implemented, the cost of newly constructed homes will increase by nearly 5%. house.
The Trump administration proposed a 25% tax in Canada and Mexico for at least a month, but a 10% tariff on goods imported from China came into effect Monday.
“(Tax) will be a reasonable price shock when they come in,” said Matthew Sanders, the company’s senior vice president of architectural product research.
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A lot of materials are required to build a home. In most categories, the majority of import supply comes from trading partners targeted this month. According to Sanders’ analysis, approximately 60% of all hardware imports come from China, Canada and Mexico. Almost three-quarters of imported sawmill wood products come from Canada. And perhaps surprisingly, the US imports more major appliances from Mexico for more money than from China.
5% may not sound very much, but some context is important. According to the Census Bureau, the median price for new homes in December 2024 was $427,000. It has grown 30% over five years, and the mortgage rate is currently just before the pandemic period.
Details: Rewinding the housing market: Since the decline in home sales in 2024, it has not been seen since the 90s
Tariffs may also have some knock-on effects, Sanders noted. For example, domestic suppliers of materials may raise prices to suit the prices of countries affected by tariffs simply because they can.
A simmering trade war with Canada is also likely to affect the supply of wood in the long run, said Stinson Dean, the investor who runs Butler’s.
“The bigger problem is the long-term effect of not being able to carry out lumber operations in Canada due to increased costs of doing business in the US,” Dean told USA Today. “We don’t need that much wood right now due to the state of the housing market, but it will change in the end.
As consumer demand for new homes is booming – perhaps if mortgage rates drop significantly, production capacity is not present, he said.
“There’s no need to even implement tariffs. The threat of tariffs is already damaging the potential rise in supply.”
The increased costs of building materials have also exacerbated the severe labor shortage in the construction industry, Sanders added. Many home builders are unable to swallow all the extra costs, and at some point consumers can’t afford to buy.
“From an immigration, potential deportation and tariff perspective, all of these are added to what is already an unsupported environment,” he said.
This story has been updated to add new information.
