The Trump administration’s tariffs are set to impact the housing market, with the cost of newly constructed homes expected to rise by nearly 5% if the proposed tariffs are implemented. This increase amounts to about $21,000 on the median-priced new home. The tariffs, imposed by the White House and countered by major trading partners like Canada, China, and Mexico, are projected to create an “affordability shock” in the housing sector, according to Matthew Saunders, a senior vice president at John Burns Research and Consulting.

The analysis reveals that a significant portion of import supplies for residential construction come from the targeted trading partners. For instance, about 60% of hardware imports, three-quarters of sawmill wood products, and a substantial amount of major household appliances are sourced from China, Canada, and Mexico. Despite the seemingly modest 5% increase in home prices, the context is crucial given the already steep rise in median home prices over the past five years.

The potential knock-on effects of tariffs include domestic suppliers raising prices in response to tariff-affected countries and disruptions in the lumber supply chain, impacting future home construction. The combination of higher building material costs and labor shortages in the construction industry could further strain affordability for consumers. The looming uncertainties surrounding tariffs and trade dynamics have already begun to influence the housing market, potentially limiting future supply growth as demand fluctuates.