Trump’s tariffs scramble an already uncertain housing market

As the nation’s economy absorbs the shock of tariffs broadly imposed this week by President Donald Trump, experts warn that housing is one area that could take a double hit.

Simon Buechler, an assistant professor at Miami University’s Farmer School of Business, said that tariffs on construction materials could impact housing costs, “while financial policy shifts may affect lending and investment in the sector.” In other words, banks could become more restrictive on loans if the overall economic climate is roiled too much, which could chill housing.

But the biggest shock will be felt in the building materials for homes, said Andrew Latham, a certified financial planner and editor at Supermoney.com

“Tariffs on construction materials like lumber, steel, and drywall can drive up home prices by making building more expensive,” Latham said, noting that the present situation is not unprecedented.

“When the U.S. imposed tariffs on Canadian lumber in 2017, prices spiked nearly 80%, adding $30,000+ to the cost of a typical new home,” Latham said, citing the National Association of Home Builders. The tariffs will be felt most in the walls of the house.

“Since over 70% of softwood lumber comes from Canada and more than 70% of gypsum, used for drywall, comes from Mexico, tariffs on these imports hit builders hard, leading to higher home prices and fewer new homes on the market,” Latham said. Still, he added, countering that could be additional business for U.S. industries which could help stabilize supply chains long term if domestic production increases.

The tariffs could also act as a brake in some markets where housing is hot, which is good or bad, depending on if you are buying or selling.

“Tariffs can also cool an overheated market by slowing demand—when prices rise too fast, fewer people buy, which can ease price spikes,” Latham said, noting that in cities already dealing with housing shortages, higher construction costs will make homeownership even tougher.

“So the long-term impact depends on whether U.S. companies can step up production fast enough to offset rising costs and keep the housing market balanced,” he explained.

Some homebuilders are already bracing themselves.

“Tariffs are going to be especially impactful on manufactured elements of homes, such as appliances and pre-built roof joists. These items often cross the border more than once, and get hit with tariffs each time they do,” said Jonathan Palley, CEO of Clever Tiny Homes. Multiple tariffs will be especially problematic for his business, he said, since manufacturing is how they bring down costs.