Tariffs have been dominating the news cycle for months. But while plenty of ink has been spilled on cars, groceries, and trade deficits, the story that’s received less attention is the one that impacts housing.
If you care about tariffs, housing is probably what you care about most. Today, we’re breaking down what’s actually happening on tariffs, what it means for construction costs, and how it impacts the dilemma facing sellers and buyers today.
The Building Blocks of American Housing
Understanding why tariffs impact housing starts with understanding where our homes come from.
Softwood lumber is what every home in America is built with. Canada provides about 85 percent of our softwood lumber imports and nearly one quarter of our total domestic supply. America does not produce enough lumber domestically to satisfy construction demand, and it can’t just build more lumber mills to boost production in the near term.
Steel, aluminum, copper, kitchen cabinets, bathroom vanities, appliances, and drywall all come from abroad. Each of those materials faces a tariffs for imported goods right now.
Escalating costs add up, no matter where you run in the housing market. But they’re especially relevant for homeowners who need to understand where their home sits in context with the overall market.
The Current Tariff Landscape
Tariffs have fluctuated substantially over the past year. Today’s status quo is accurate as of this writing, but could change again tomorrow.
Standard softwood lumber imported from Canada faces an effective duty rate of about 45 percent as of publication. The rate increases to nearly 50 percent starting in June 2026. That’s the result of Section 101 tariffs (a blanket 10 percent duty on all timber and lumber imports) layered on top of anti-dumping/countervailing duties, which were increased from 14.5 percent to 35 percent in May 2022 and will increase again in June.
Steel, aluminum, and copper are subject to Section 232 tariffs of 50 percent. Cabinets, vanities, appliances that come from overseas manufacturers face duties of 25 percent starting in October 2025 that will phase up to a final rate of 50 percent in 2026. Drywall manufacturers in Mexico face an additional surcharge due to broader import tariffs.
Cumulatively, those tariffs add up to significant cost increases for builders and homeowners alike. The NAHB recently surveyed builders, who report widespread cost increases attributable to tariffs. The average respondent reported that tariffs have increased their cost per home by $10,900.
Builders aren’t guaranteed to pass those costs along to consumers, but most do at least part of the time. Construction industry estimates of the tariffs’ potential impact range from $9,000 to $35,000 per home.
One and Done: Tariffs and New Construction Costs
Material costs affect new housing stock directly, which matters for every player in the housing market, not just buyers of new construction.
Material cost increases mean builders either accept thinner margins, increase prices, or (most likely) some combination of both. Higher prices depress demand, and builders have already reported slowing production in response to cost increases.
The NAHB found a 2.1 percent drop in single-family housing starts because of tariffs. That compounds a years-long trend of slowing housing construction due to supply chain issues and surging material prices.
Broader estimates from the Center for American Progress put the reduction in construction even higher, predicting that tariffs may keep as many as 450,000 homes from being built over the next five years.
That has serious implications for an economy that was already short an estimated 3.7 to 4.9 million homes relative to demand even before tariffs began impacting prices. Fewer homes built translates to fewer homes for sale, which exacerbates the supply shortage and puts upward pressure on prices.
Prices of new homes have already been impacted. New home sales are at their slowest pace since 2022, and the median price of a new home fell nearly 7 percent year over year in January as builders discount to remain competitive.
Yet builders are discounting even as their own cost bases rise. That squeezes margins and discourages future production when builders can’t pass along costs to consumers.
Renovations and Repairs Around the Home
Material costs don’t impact just newly constructed homes. Everything from kitchen renovations to plumbing repairs import materials that are now more expensive thanks to tariffs.
Repairs that require cabinetry, appliances, specific types of lighting fixtures, copper piping, or lumber face tariffs ranging from five percent to as much as 25 percent.
The starting price point for building materials was already up 40 percent from pre-pandemic levels. Tariffs are only pushing those costs even higher.
If you bought a home before the last construction boom and have been waiting for the right time to remodel that kitchen or upgrade your bathroom, now may not be the time. Materials prices will come down eventually, but they’re not likely to come down anytime soon.
HOW INCREASED MATERIAL COSTS IMPACT EXISTING HOME SALES
Now for the kicker.
When new construction gets more expensive, existing homes become more attractive by comparison.
Everyone who’s shopping for a new home has done this kind of mental calculation. If you can buy a built-to-order home that meets your specs, why would you buy someone else’s hand-me-downs? But if new homes cost more, whether because builders are pricing those costs into sales or because they can’t afford to build as many, then resale value starts to look pretty good.
Historically, that pressure has maintained existing home values when construction costs rise. New housing shortages don’t cause existing home prices to spike, but they can cushion the blow of price reductions in a soft market.
The flip side is that homeowners who are looking to make repairs or renovations before they sell need to be realistic about cost. Kitchens that could be renovated for $40,000 in 2022 may cost considerably more in 2026. Will the value that upgrade adds to your home exceed the cost of completing it? If not, you may want to reconsider those upgrades.
The Playbook for Texas Homeowners
We live in Texas, which means we deal with home construction from both perspectives. Texas ranks in the top five states for single-family construction and rental investment every year.
DFW is home to one of the nation’s largest concentrations of that activity. As a result, we’ve seen supply come online from new construction that begins to rival demand from would-be buyers who don’t want to build.
So what happens when new construction suddenly gets more expensive and fewer homes come on the market? Builders restore some of the pricing power they’ve lost to resale competition.
Remember, that doesn’t necessarily translate to a sellers’ market or healthy appreciation. Buyers are still dealing with rent payments, rate hikes, and uncertainty from macroeconomic factors. But the pressure eases.
Tariffs throw a wildcard into an already precarious situation. Trade policy and construction input costs have changed multiple times since March. Industry experts are almost unanimous in agreeing that costs will continue to fluctuate wildly for the foreseeable future.
The Impact of Import Tariffs on Construction Costs
One thing we do know is that tariffs impact everyone across the housing market, from builders to sellers to buyers and renters. Materials get more expensive to deal with across the board.
Whether you’re paying those costs as a builder, passing them along to buyers, or deciding between buying a new build versus resale, tariffs have real impacts on the housing market that affect your wallet.
If you’re selling a home in DFW, here are the two big takeaways:
Update (renovation) costs are higher than they were six months ago and may not come down for a while.
Building new homes remains more expensive than it was pre-pandemic due to persistently high material prices. Tariffs exacerbate an existing problem, and they’re unlikely to be removed before material production catches back up with demand.
New housing construction is already a competitive threat for sellers. When tariffs drive up those costs, we’ll likely see that competition diminish.
Uncertainty is frustrating. Tariffs are too, and they’re one more issue compounding what has already been a really tough couple of years for the housing market. By knowing how tariffs impact housing specifically, you can more easily cut through the noise and make informed decisions moving forward.