A new home for shopping? Ready to renovate your kitchen or install a new deck? You have to pay more.
The Trump administration’s tariffs on Canadian, Mexico and China’s imports (some are in place and some have come into effect within weeks) are already pushing for the cost of building materials used in new residential building and home renovation projects.
According to the National Association of Home Builders, tariffs are expected to increase the cost of building single-family homes in the United States by $7,500 to $10,000. This cost is often passed on to home buyers in a higher form, which is still in a downturn in the U.S. housing market, and many builders have to offer buyers costly incentives to encourage sales, which can hurt demand.
We buy a home in San Francisco, which buys a foreclosure and then usually renovates and sells it, and its refurbished property price increases its price to 7% to 12%. Even after saving $52,000 in costs, Canadian wood is 62% more than usual.
“The uncertainty over how long these tariffs will continue is the most challenging aspect of our plan,” said CEO Mamta Saini.
The builder's bad opportunity
For home builders and the home remodeling industry, the timing of tariffs will not be worse, as it is usually the busiest family sales time of the year. The prospect of the trade war has stirred up stock markets and raised concerns about the economy, which could lead to many homebuyers who may become possible to stay off the market.
“The rising costs will leave builders with few options due to import tariffs,” said Danielle Hale, chief economist at Realtor.com. “They can choose to transfer higher costs to consumers, which will mean higher house prices, or try to use less of these materials, which will mean smaller homes.”
Prices of building materials, including wood, are still rising, even as the White House delays tariffs on certain products. On March 4, timber futures jumped to $658.71 per thousand feet, reaching its highest level in more than two years.
The increase has already inflated the cost of construction projects.
Dana Schnipper, a partner at JC Ryan, a building materials supplier in Farmingdale, New York, purchased wooden doors and frames in an apartment building in Nassau County, which costs less than the U.S. equivalent.
Half of the work has been provided. However, once the tariff goes into effect, it will apply to the remaining $75,000, adding a total of $19,000 to the AT cost. Once JC Ryan applies its markup, that means customers will owe $30,000 more than the original plan, Schnipper said.
He also expects tariffs will allow U.S. manufacturers to cover up prices for steel components.
“These prices will never fall,” Schniper said. “Whatever happens, these things will be sticky, and hopefully we're good enough as a small business that we can absorb some of them. We certainly can't absorb all of that, so I don't know. It's going to be a fun few months.”
Avoiding tariffs by using alternatives to imported building materials is not always an option.
Bar Zakheim, owner of Better Place Design & Build, a contracting business in San Diego, specializes in accessible residential units or Adus, says Canada remains the best source of wood.
By insisting on importing timber, Zachheim had to raise its price by about 15%, compared to a year ago. He has 8% less work in line than last year.
“I'm not going to go bankrupt, but it's been a slow and expensive year for us,” he said.
Tariff roller coaster
On March 6, the Trump administration announced a one-month delay on certain imports from Mexico and Canada, including cork timber. The 20% tariff on imports from China is already in effect. On March 12, a 25% tariff was imposed on imports of steel and aluminum – a 50% import rate on Canada.
According to NAHB, tariffs that will come into effect next month will increase the cost of importing building materials by $3 billion. These price increases will complement the 14.5% tariff on Canadian timber that the United States has previously imposed by the United States, raising tariffs on Canadian timber to 39.5%.
Regarding Air Force One, President Donald Trump said he was pushing his tariff plan on April 2 despite the recent disruption of stock markets and tensions on the economy.
“April 2 is the liberation day of our country,” he said. “We have restored some very, very stupid presidents to give up because they don't know what they are doing.”
According to NAHB, building materials costs have generally risen 34% since December 2020.
Builders rely on raw materials, appliances and many components produced abroad. Of all products used in single-family residential and apartment building construction, about 7.3% are imported. According to NAHB, nearly a quarter of this comes from Canada and Mexico.
The two countries also account for 70% of the import of two major housing construction materials: wood and gypsum. From frames to cabinets and furniture, Canadian wood is used for use. Mexican gypsum is used to make drywall.
In addition to raw materials, refrigerators, washing machines, air conditioners and other household components, it is also produced in Mexico and China, which is also a key source of steel and aluminum.
True Value Hardware president Dent Johnson said the tariffs would mean higher prices for home improvement shoppers.
“The reality is that many of the products on your local hardware store shelves will end up being affected,” he said in a statement emailed to the Associated Press.
Cooling effect
Chaos in the timing and scope of tariffs and their impact on the economy may have a greater chilling impact on the new household market.
“If consumers can't plan, if builders can't plan, it's hard to know how to price a product because you don't know you need to relocate it,” said Carl Reichardt, home building analyst at BTIG. “If people are worried about their jobs, worrying about the future, no matter what the price, it's hard to make a decision to buy a new home.”
NAHB chief economist Robert Dietz said this year, uncertainty created by the Trump administration’s tariff policies could lead to increased volatility in home sales and new home construction.
Ditz said that since it can take several months to build a home, the greater impact from the cost of building materials will occur “on the road.”
The impact of tariffs on consumers is already obvious
“There are no ones who are preparing for the spring as usual,” said co-owner Jonathan Falcon. “It seems that people are just reducing spending.”
Falcon also fears that small businesses like him will struggle to absorb the effects of tariffs.
“It’s like another thing that’s harder to handle than big guys than big guys, and just keep driving businesses like ours to not do that,” he said.
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Journalist Anne D'Innocenzio contributed.
