As we move further into 2025, the U.S. housing and construction industry is feeling the effects of sweeping tariff changes. Here’s what you need to know about how these policies are shaping the cost and availability of housing materials — and what it means for the market.
🔧 Key Tariff Developments
Steel & Aluminum:
A 25% tariff on all steel and aluminum imports took effect in March 2025. This has led to a nearly 6% increase in steel product prices and a 5% rise in copper wire costs, making construction significantly more expensive.Canadian Lumber:
The U.S. continues to impose a 14.5% tariff on Canadian softwood lumber, with plans to raise it to 34.5% later this year. Since Canada is a major supplier, this move could further hike housing construction costs.General Import Tariff:
In April 2025, a 10% tariff was introduced on most imported goods — including construction materials and appliances. This broad policy is increasing overall homebuilding costs.
📉 Market Impacts
New Home Costs:
According to the National Association of Home Builders (NAHB), tariffs have added over $10,900 to the cost of building a typical new home.Construction Activity:
Both housing starts and building permits are down — a clear sign that the pace of new construction is slowing in response to rising material costs.Builder Confidence:
Sentiment among U.S. homebuilders has dropped significantly. Uncertainty around material pricing is making developers more cautious.
💸 Broader Economic Ripple
Inflation Concerns:
Tariff-driven price increases have contributed to a spike in inflation expectations — reaching their highest level since 1981. This is weighing on consumer confidence and purchasing power.Economic Growth & Jobs:
Experts estimate that the 2025 tariffs could cut real GDP growth by nearly 1% and eliminate up to 770,000 jobs by year-end.
📊 Market Snapshot
SPDR Homebuilders ETF (XHB): $99.68
iShares U.S. Home Construction ETF (ITB): $94.70
These slight declines reflect investor concerns about rising construction costs and a possible housing slowdown.
🧱 Final Thoughts
Tariffs are raising the price of key building materials, squeezing developers and homeowners alike. As costs rise, new construction slows — further tightening an already strained housing market.
We’ll continue to monitor how these policies evolve and their effect on affordability and market activity.
Stay informed,
Broker Alliance