New Homes in the US to Become $11,000 More Expensive Due to Trump's Global Tariffs

Homebuilders in the United States have sounded the alarm that the cost to construct a new home has jumped by nearly $11,000 because of the global tariffs introduced by President Donald Trump. This increase is even higher than what was originally anticipated.
 

Why This Is Important

Trump promised during his campaign that he would work to lower the costs of housing and increase the supply by removing regulations and deporting migrants.

Despite these promises, experts are now warning that the tariffs he has put in place are likely to make homes more expensive for Americans.

The country is already dealing with a housing affordability crisis. The increase in building costs caused by the tariffs might hold back builders from starting new projects or might lead to higher prices for buyers.
 

Key Details

 

• According to a survey by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), 60% of builders have noticed that their suppliers have increased prices or plan to do so because of Trump's tariffs.
• On average, suppliers have raised their prices by 6.3%. This means it now costs about $10,900 more to build a home, which is up from the increase of $9,200 estimated in March.
• The sentiment among home builders is still not very positive, with an HMI score of 40 in April. A score below 50 indicates a negative outlook.
• The report also notes that builders have had to reduce the selling prices of homes in order to attract buyers who are hesitant because of high mortgage rates and increasing prices.
• In April, 29% of builders reduced their prices, which is consistent with March. The average price reduction was 5%.

 

What People Are Commenting

Robert Dietz, NAHB's chief economist, stated that uncertain policies are negatively impacting home builders by making it difficult for them to price homes accurately and make important business decisions. He also mentioned that the effects of tariff costs are already visible, with the majority of builders reporting increased material costs due to tariffs.

Buddy Hughes, NAHB chairman, reflected that a recent drop in mortgage rates may have encouraged some buyers in March, aiding builders in sales. However, he pointed out that the uncertainty and volatility in material prices, exacerbated by tariffs at a time of labor shortages and limited building sites, is a growing concern.

Anirban Basu, chief economist for the Associated Builders and Contractors, previously told Newsweek that tariffs have directly increased material costs by making it more expensive to import certain materials.

This also allows domestic producers to hike their prices, as seen in April’s Producer Price Index increases for specific construction inputs. The rush to purchase materials before tariffs take effect has also pressured prices higher.
 

Looking Ahead

As building costs rise because of Trump's tariffs, homebuilders might have no choice but to increase prices for buyers, making it harder for many to afford a new home.

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