The Impact of Tariffs on Housing Costs
According to the National Association of Homebuilders (NAHB), an estimated $204 billion worth of goods were used in construction of both new multi-family and single-family housing in 2024. Goods, totaling $14 billion, were imported from outside the U.S. This total is approximately 7% of all goods used in new residential construction originating from a foreign nation.
A typical new single-family home requires an average of $174,155 worth of building materials for construction. Imports account for $12,713 of the total building material cost. In the short run, the price of building materials will become volatile as they are typically driven by price expectations. The price expectations have moved higher by the recently announced tariffs.
On April 2, President Trump announced he would impose a 10% baseline tariff on all of America’s trading partners excluding Canada and Mexico. Exempting Mexico was positive for other major cost drivers such as gypsum, concrete, and near-shored appliances. The tariffs in place on other countries will still be impactful to many parts of the market.
The White House has been particularly interested in lumber as it studies which imports come into the U.S. According to the National Association of Home Builders (NAHB), the U.S. relies on lumber imports to meet about 30% of its domestic demand.
The existing tariff on Canadian lumber is 14.5% and remains in place. In August 2024, the U.S. Department of Commerce raised tariffs on imports of Canadian softwood lumber products from the rate of 8.05% to 14.54% following its annual review of existing tariffs. The Commerce Department has conducted annual reviews of Canadian lumber for many years. Their latest review signals a preliminary determination to more than double to 34.5%. If this takes place, it is expected to go into effect September 2025. Canada is one of the major suppliers of lumber to the U.S., with about 80% of U.S. softwood lumber imports being sourced.
The complexity of tariffs makes it difficult to estimate the overall impact on housing, but the exemption of Mexico and Canada was considered a win by the NAHB, as both countries are key suppliers of critical construction inputs. Initial estimates—made before the exemptions—suggested that tariffs could increase builder costs by $7,500 to $10,000 per home. Of that, approximately $4,900 was attributed to higher lumber costs. These estimates were based on a baseline 10% tariff on Canadian imports. Now that Canada and Mexico are exempt, these cost increases should be significantly lower.
The White House issued an executive order in March commanding the Commerce Department to investigate the national security impacts of imports of timber and lumber. An executive order was also issued to increase domestic lumber production through a streamlining of regulatory and permitting processes.
With strong support from NAHB, the White House passed the Fix our Forest Act in late January. This legislation would contribute to better forest management practices and help strengthen the nation’s housing supply chain and help promote affordable housing.
The NAHB has been a leader in impacting housing affordability within their trade industry. NAHB is involved in efforts to boost sawmill production and increase the domestic supply of timber from federally owned lands in an environmentally responsible manner. These efforts could have a significant impact on lowering building costs and achieving less dependency on Canada for lumber. However, ramping up domestic lumber production is easier said than done. Several years may be needed to build multiple new mills and finding workers to bring U.S. lumber to market is another complexity.
The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations. This conflict arose in 1982 and its effects are still seen today.
The heart of the dispute is the claim the Canadian lumber industry is unfairly subsidized by federal and provincial governments since most timber in Canada is owned by the provincial governments. The United States argues the Canadian arrangement is an unfair subsidy and falls under U.S. trade remedy laws, which allow for countervailing duties to offset subsidies and restore market-based pricing.
Any additional tariffs on lumber and building materials will likely lead to increased building costs but with many possible changes. It is too early to ascertain clarity of the cost.
Source: https://www.nahb.org/blog/2025/04/lumber-reciprocal-tariffs
Source : https://www.investopedia.com/here-s-where-tariffs-will-hit-the-housing-market-11713457
Source : https://www.nahb.org/blog/2024/08/canadian-lumber-tariffs
Source: https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute