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This week, the U.S. is about to impose new tariffs as a part of President Donald Trump’s commerce coverage. Imports from Canada and Mexico are going through an extra 25% tariff—with the one exception being vitality assets from Canada, which can have a ten% tariff added—whereas imports from China shall be topic to a brand new 10% tariff.
Though there have been indicators on Monday that at the least some of these tariffs may be delayed, builders have already been feeling anxious. Certainly, on Friday the Nationwide Affiliation of Dwelling Builders (NAHB) published a public letter asking Trump to exempt constructing supplies from the elevated tariffs on Canada and Mexico, citing their “dangerous impact on housing affordability.”
The rationale for the unease: Even earlier than the tariff announcement, homebuilders have been feeling pinched by spiked building and labor prices—simply have a look at the Nationwide Affiliation of Dwelling Builders latest national averages for itemized costs in every stage of building for a brand new single-family residence.
In 2022, the common gross sales worth of recent single-family houses sampled by NAHB was $644,750 and contains prices for building, the completed lot, financing, overhead and normal bills, advertising and marketing, gross sales fee, and revenue. Complete building prices for the “common” new single-family residence included within the survey was $392,241.
In 2024, the common gross sales worth of recent single-family houses sampled by NAHB was $665,298 and whole building prices for the “common” new single-family residence included within the survey was $428,215.
Amongst new builds included within the survey, that’s a 3.2% soar for common gross sales worth and a 9.2% soar for whole building prices.
Since mortgage charges spiked in late spring 2022, decrease housing demand—together with builders in lots of markets providing extra incentives and affordability changes to draw patrons—has squeezed margins off the historic highs achieved throughout the pandemic housing growth. For some homebuilders, rising enter and building prices have additional compressed margins over the previous two years.
See the chart beneath. (Observe: Every class beneath contains “all the prices paid by a builder that go into a selected merchandise, together with labor prices paid straight by the final contractor, the price of hiring subcontractors, and the price of supplies, nevertheless they’re bought.”)

Homebuilders have seen one main space of aid: framing. Through the pandemic housing growth, a surge in housing demand and transforming demand collided with provide chain disruptions, sending lumber costs to historic highs. Sawmills, which had reduce manufacturing early within the pandemic anticipating a slowdown, struggled to maintain up as demand soared, inflicting lumber costs to skyrocket.
Lumber costs got here again down as provide chains improved and demand for transforming softened, thus reducing prices for framing.
Certainly, the value per thousand board toes of lumber, presently at $592, is 58.3% beneath its peak of $1,419 in Might 2021. Some lumber futures contracts on the time in spring 2021 have been buying and selling for over $1,700 per thousand board toes.

The issue for homebuilders: The one space of worth aid—lumber—additionally occurs to be one of the weak to a worth squeeze if the brand new U.S. tariffs on Canadian items stay in place.
Round 30% of the softwood lumber used within the U.S. is imported from Canada. This softwood lumber already faces a median responsibility of 15%, which might rise to 40% if Trump’s extra tariffs take impact.
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