Homebuilders Face Rising Costs: Tariffs Could Add $9,200 Per Home

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Homebuilders are earmarking several thousands of dollars in additional costs as tariffs begin to affect the housing market.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index for March declined to 39, its lowest level since last August. Worries about rising construction costs helped bring down homebuilder sentiment for the second straight month. The survey showed that builders are pricing in $9,200 in additional costs per home as they plan for tariffs' effect on building materials.

President Donald Trump’s tariff policies have frequently targeted homebuilding materials. He has already implemented a 25% levy on steel and aluminum imports and has threatened to tax Canadian lumber and concrete.

“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” said NAHB Chairman Buddy Hughes, a homebuilder from Lexington, N.C.

The decline in homebuilder sentiment comes as other surveys have shown that those in other parts of the economy are starting to worry about tariffs. Consumers and small businesses are losing confidence in the economy's future.

That lack of confidence may be driving down new home sales. The NAHB survey showed that homebuilders reported the fewest house hunters since December 2023.

“Uncertainty on policy is also having a negative impact on homebuyers and development decisions,” said NAHB Chief Economist Robert Dietz.

However, Hughes also said that homebuilders were seeing some regulatory relief from the Trump administration, including action to pause some building code requirements and amend the environmental permitting process in order to speed up approvals.

National Association of Home Builders. “NAHB/Wells Fargo Housing Market Index (HMI).”

National Association of Home Builders. “Builder Confidence Falls on Cost Uncertainty.”

National Association of Home Builders. “NAHB Commends EPA’s Action on Waters of the U.S. Rule.”