How homebuilders may contend with higher costs amid tariff whiplash

The on-again, off-again nature of tariff policy from the White House is throwing another wrench into housing affordability, at a time when constrained inventory and high mortgage rates have already locked out many would-be homebuyers.

Uncertainty about where tariffs will ultimately end up — not to mention the blanket 10% tariff already in place and a 145% tariff on goods from China — may cause some homebuilders to pause or pivot, which could put further pressure on home prices. Homebuilders are estimating the average new home could increase by $10,900 because of recent tariffs, according to the most recent National Association of Home Builders/Wells Fargo Housing Market Index.

Waning demand from buyers because of recession fears or inflationary concerns may prove to be a countervailing force to cost increases from tariffs and persistently high mortgage rates, but that remains to be seen.

Housing starts are already pulling back, declining 11.4% in March to a seasonally adjusted annual rate of 1.32 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Even before the recent tariff policy, new-construction starts were already trending downwards, but tariffs — combined with already-high interest rates and other costs — are expected to slow new construction even further, especially if demand for housing weakens as consumers remain wary about the economy.

https://www.bizjournals.com/seattle/news/2025/04/22/tariffs-builders-impact-cost-increases-spring.html