Trump Tariffs Will “Harm” Housing Costs, NAHB Opposes

Trump’s order on tariffs

President Trump’s executive order to levy tariffs against imports from Canada, China, and Mexico is in effect.

The order would heighten the already-high housing construction costs in the United States through increased prices on foreign materials. The National Association of Home Builders released a statement in opposition.

Declaring trade wars on Canada, China and Mexico

The Trump Administration’s 25% import tariffs on Canada and Mexico went into effect on Tuesday, March 4* and will raise the prices of many housing materials. Additionally, import tariffs on China doubled to 20%.

On Saturday, Feb. 1, President Trump declared through executive order that 25% tariffs be imposed on Canadian and Mexican imports, 10% tariffs on Chinese imports, and 10% tariffs on Canadian energy imports. Originally set to begin Tuesday, Feb. 4, Trump gave Canada and Mexico a one-month pause after meeting with Canada Prime Minister Justin Trudeau and Mexico President Claudia Sheinbaum on Feb. 3.

The White House fact sheet claims that these three countries are being held “accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.” The trio makes up the three largest trade partners to the U.S.

The additional costs from tariffs will be passed along from the government to the companies, and will ultimately fall on the consumer. While this goes against the President’s previous statements to “drastically lower the cost of housing and expand housing supply,” it follows the administration’s agenda of seizing government control and consolidating power.

The tariffs would increase home construction costs by an estimated 4%-6% over the next 12 months, according to CoreLogic.

*Update: Tariffs against Canada and Mexico have been postponed another month, set to begin April 2, 2025.

NAHB speaks out

On Saturday, Feb. 1, the National Association of Home Builders (NAHB) released a statement titled, “25% Tariff Hike on Canadian and Mexican Goods Harms Housing Affordability.”

From NAHB Chairman and home builder, Carl Harris:

“On President Trump’s first day in office, he issued an executive order directing departments and agencies to deliver emergency price relief by pursuing actions to lower the cost of housing and increase housing supply. This move to raise tariffs by 25% on Canadian and Mexican goods will have the opposite effect. More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum (used for drywall) — come from Canada and Mexico, respectively.

“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices. NAHB urges the administration to reconsider this action on tariffs and we will continue to work with policymakers to eliminate barriers that make housing more costly and prevent builders from boosting housing production.”

Based in Washington, D.C., NAHB is a trade association with over 140,000 members in residential and light commercial construction including; home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, and building product manufacturing. Affiliated with 700 state and local home builders associations across the country, NAHB members will construct about 80% of the projected new housing units this year, the association said.

Home builder confidence

Every month, the National Association of Home Builders and Wells Fargo survey NAHB members to measure their sentiment on consumer demand, market conditions, shifting costs, etc., on a 0-100 scale.

The most recent index hit a five-month low of 42 in February down from 47 in January and 48 in February 2024.

“Uncertainty on the tariff front helped push builders’ expectations for future sales volume down to the lowest level since December 2023,” Harris said.

Construction loans

If you’re looking to build a home, speak with a lender about specialized mortgage options. Conforming borrowers can choose from three main loan types: construction-to-permanent, construction-only, and owner-builder.

If you meet the requirements to qualify, the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Department of Agriculture (USDA) all offer their own construction loans. Also, get to know what to expect when buying new construction.

The bottom line

There’s been plenty of speculation about what a second Trump term means for the housing market.

We now know President Trump’s action will likely cause higher home prices, particularly in regions with significant new developments, and keep inventory tight for prospective home buyers in an already tough landscape. This doesn’t include the impacts from his anti-immigration policies.

Many people gain wealth through homeownership. If you’re ready to buy or build a house, help yourself by improving your profile, learning to negotiate, and getting down payment assistance and/or closing cost assistance.