New Housing For-Sale Builders NAICS 236117

Mar 24, 2025 - Tariffs Prompt Home Builders to Beef Up Inventories

• Some home builders are buying up extra lumber, fixtures, appliances, and other materials ahead of Trump administration tariffs, but the strategy could prove risky if high home prices keep buyers away, according to The Wall Street Journal. Some builders are pivoting to less expensive materials or reducing home sizes to offset the potential rise in materials costs brought on by tariffs. Industry observers suggest large home builders are better shielded from tariff-related uncertainty as their size gives them greater buying power to resist price hikes. However, smaller builders are more vulnerable. Building stockpiles of supplies presents risks for builders and distributors if demand dips and they are stuck holding unsold inventory. The National Association of Home Builders estimates that tariffs could increase the cost of building a single-family home by $7,500 to $10,000.
• A lack of affordability in the new single-family home market could hinder demand for new homes. In 2025, nearly 75% of US households are unable to afford a median-priced new home, according to the National Association of Home Builders. Given a median new home price of $459,826 and a 30-year mortgage rate of 6.5%, more than 100 million US households are priced out of the market. In 23 US states and Washington DC, more than 80% of households cannot afford a median-priced new home, suggesting a significant discrepancy between home prices and household incomes.

• Some cities are mitigating housing shortages by converting shuttered hospitals into residential space, according to The Wall Street Journal. Because hospitals’ patient rooms often have high ceilings and individual bathrooms, they’re easier to convert into housing than office buildings. Hospitals are also usually situated near city centers and transportation hubs. Federal tax incentives for redeveloping old hospitals are helping to fuel the trend as cities struggle with housing shortages. In 2023, the 20% federal historic tax credit for eligible projects reached $225 million, according to Wall Street Journal analysis of National Trust for Historic Preservation data. Such projects are particularly attractive for rural communities as more hospitals in outlying areas close. The Center for Healthcare Quality and Payment Reform estimates that as many as 700 rural hospitals are at risk of closing.
• Home builder confidence in the single-family market dropped in March 2025 amid mounting concerns about tariff threats, higher input costs, and economic uncertainty, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), dropped three points to 39 in March from 42 the previous month. Any HMI reading over 50 indicates that more builders see conditions as good than poor. While builders still face headwinds, including high materials costs being made worse by trade strife and labor and lot shortages, the industry is encouraged by the Trump administration’s emphasis on reducing regulations.