Residential Building Contractors NAICS 2361

Nov 17, 2025 - Tariffs, Immigration Enforcement Weigh on Builders

• President Trump’s tariffs and immigration crackdown are straining US homebuilders, raising costs and worsening labor shortages, according to The New York Times. Builders face higher prices for steel, copper, lumber, and other materials, with tariffs adding up to $10,900 to the cost of a typical home, according to the National Association of Home Builders. Immigration enforcement has made workers fearful, delaying projects and shrinking crews. Construction added only 6,000 jobs through August, despite an Associated Builders and Contractors projection that nearly 500,000 more workers will be needed in 2026. Builders are slowing activity, cutting budgets, and bracing for slower growth as high mortgage rates and weak demand are dragging down sales. Economists warn that even if interest rates fall, labor and material pressures could intensify.
• America’s largest homebuilders are struggling to sell new homes despite offering 4% mortgages and deep discounts, according to The Wall Street Journal. D.R. Horton and Lennar have slashed prices and added incentives, but demand remains weak, pushing unsold inventory to levels last seen in 2009. Builders are slowing construction, with D.R. Horton cutting starts by 21% year over year for the three-month period through September. Regional gluts in Texas, Florida, Southern California, and Washington, DC reflect rising resale competition, fewer foreign buyers, and economic uncertainty. Investor activity is at a 15-year low, with institutional buyers demanding steep discounts that builders won’t meet. New homes, often located in less desirable areas and targeted at first-time buyers, are more challenging to sell.

• North American construction spending on residential construction in 2026 is expected to rise 1% after decreasing an estimated 2% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Single-family construction is expected to face sluggish growth, as mortgage rates are anticipated to remain at 6%-6.5% early next year. Household incomes have not kept pace with rising median home prices, contributing to the lack of affordability. In response, builders have focused on entry-level and built-for-rent homes with fewer bells and whistles, especially in more affordable regions of the country, including the South and Midwest. Single-family construction spending is expected to rise 1% in 2026, 2% in 2027, 4% in 2028, and 5% in 2029. Multifamily construction is expected to decrease by 2% in 2026, amid oversupply in some key markets and weak rent growth. Amid stronger absorption and falling vacancies, multifamily construction spending is forecast to rise 5% in 2027, 8% in 2028, and 9% in 2029. The rising median age of US homes and high levels of homeowner equity are expected to sustain steady remodeling spending growth of 2% in 2026 and 2027, 4% in 2028, and 5% in 2029.
• Multifamily developer confidence improved in the third quarter of 2025 but remained in negative territory, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose six points in Q3 2025 to 46 compared to the third quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While the MPI index indicates weakness in the multifamily construction market, the softness is mostly concentrated in mid-to-high-rise and condominium development, while developers of low-rise and subsidized rental properties are more optimistic.