Single-Family Home Builders NAICS 236115

Apr 10, 2025 - Tariff Uncertainty Weighs on US Housing Market

• Higher home prices could weaken demand for new homes, as a lack of affordability was a significant headwind for the US housing market before tariffs added additional uncertainty. On April 9, the Trump administration paused its reciprocal tariff agenda for 90 days for most countries but left in place a baseline 10% import duty on all countries except China, which faces total tariffs of 145%. Canada and Mexico are not subject to the new 10% baseline tariffs, and goods trading under the US-Mexico-Canada Agreement will remain duty-free. Key home-building materials, including gypsum from Mexico and Canadian lumber, avoided additional levies. However, tariffs are expected to increase prices for other housing inputs, including steel, aluminum, copper, and home appliances. Before Trump’s tariff pause, a UBS analyst estimated that reciprocal tariffs could add about $6,400 to the cost of building the average house.
• Tight lending conditions and high interest rates have weakened demand for new home construction loans. In the fourth quarter of 2024, the volume of outstanding residential acquisition, development, and construction (AD&C) loans made by FDIC-insured institutions declined for the third quarter in a row, according to the National Association of Home Builders (NAHB). The value of residential AD&C loans in Q4 2024 fell 1.02% to $490.7 billion compared to Q3 2024. Construction loans for single-family homes and townhomes fell for the seventh consecutive quarter in Q4 2024.

• Lumber futures fell when President Trump unveiled his reciprocal tariff plan on April 2, 2025, and Canadian lumber was not among the targeted products, according to The Wall Street Journal. Lumber prices had been ticking up amid anticipated increases of existing levies on Canadian lumber imports. Prices may have also drifted downward due to expectations of weaker housing demand as tariffs increase the costs of building homes, reducing affordability. Trump paused the reciprocal tariffs for 30 days on April 9. Tariff uncertainty may lead to additional lumber price volatility.
• Raids by Immigration and Customs Enforcement (ICE) are prompting some foreign-born workers to stay home from their workplaces, disrupting key industries that rely on migrant workforces, including construction, according to The Wall Street Journal. The Trump administration has said that while it is focusing on undocumented people with criminal backgrounds, anyone in the country illegally faces increased risk. According to an analysis of US Census Bureau data by the American Immigration Council, undocumented immigrants make up about 14% of the US construction sector’s workforce. The Associated General Contractors of America said it had received anecdotal reports of rising absenteeism from member firms in several locations, including Florida, Georgia, Oklahoma, and Texas. Labor disruptions reduce construction firms’ ability to deliver projects on time.