Homebuilders and homebuyers are facing a tricky calculation in trying to nail down the cost of construction due to tariffs.
Beginning Tuesday, the Trump administration added a 10% tariff on imports of timber and lumber and a 25% tariff on kitchen cabinets and bathroom vanities and some furniture.
"The obvious implication is they make home building more expensive," said economist Zack Fritz.
Fritz works with The Associated Builders and Contractors, a construction trade group. He notes home building costs were already rising.
They accounted for over 64% of the price of a new home last year, up from about 61% in 2022.
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"I think in the current environment, home builders will eat some of those costs," Fritz said. "The more immediate implication is they'll build fewer homes."
That's happening already, according to data from the Commerce Department. Home-building dropped more than 8% in August.
"Long-term when we increase the cost of building homes that means builders will just build fewer homes and that means that buying a home or renting a home will be more expensive in the future," said Redfin economist Chen Zhao.
That could lead to even more challenges for buyers in a market that already saw homes hit a record average price this year.
