Tariffs Could Inflate Housing Costs, But The Full Impact Remains Uncertain

While most industry stakeholders expect tariffs to be inflationary, economists tell The Builder’s Daily that there is still a lot of uncertainty, which makes predicting tariff impacts difficult. 

The Center for American Progress, a progressive think tank, released a report on Tuesday that forecasted a $17,500 cost impact per new home as a result of the Trump Administration’s tariff policy. 

The report used an analysis from the nonpartisan Urban-Brookings Tax Policy Center to make the forecast, based on a model that predicts a $27 billion annual construction tariff impact by 2030. However, modeled economic forecasts rely on assumptions, which can be tricky when there is still so much uncertainty around tariff policy. 

The National Association of Home Builders (NAHB) released data in March forecasting that tariffs would have a cost impact of $7,500 to $10,000 per single-family home. Additionally, in May, the organization released survey data revealing that builders estimate an average cost increase of $10,900 per home due to tariff actions, but 40% of respondents hadn’t seen any impacts yet. NAHB hasn’t released further estimates due to the uncertain climate. 

The cost of uncertainty

“One of the downsides of tariffs, and this really is a cost, is the uncertainty. The rules change. And so one of the reasons that we haven’t put out a new estimate of the impact on the per single-family home is we’re waiting for a period of time where the rules kind of solidify, right? And we can get an estimate that will be long-lasting,” said Robert Dietz, senior vice president and chief economist at NHB.

This uncertainty could explain why there is such a large range of forecasts. For example, Pulte’s CEO, Ryan Marshall, warned in the spring that tariffs could increase the cost of building a Pulte home by about $5,000 once the impact of tariffs is fully felt. While this is steep, it is more modest than some other estimates. 

The looming Supreme Court case won’t impact several tariffs on construction goods. These include the following:

• A 50% steel and aluminum tariff that went into effect in June. 
• A 50% tariff on imported semi-finished copper and derivative copper products, such as pipes and wires, which began in August. 
• A 10% tariff on all softwood lumber and timber imports that went into effect in October. Canadian softwood lumber, which accounts for about 85% of lumber imports, is now subject to a 45% duty rate. 
• A 25% tariff on imported kitchen cabinets and vanities that went into effect in October is scheduled to increase to 50% on Jan. 1.

However, there is some unpredictability around the long-term implementation of these levies. President Trump, for example, issued an executive order in November that pulled back tariffs on beef, tropical fruits, coffee and other commodities amid mounting pressure over grocery prices. 

If there are impacts on housing prices, the administration could potentially dial back some tariffs on construction materials. But this is far from certain. 

“We’ve tended to see an announcement of higher tariffs on some segment or some class of goods, or against some country, and then a reversal of that in some way, and a reannouncement of some version of it,” said Brad Case, chief residential economist at Homes.com.

Tariff impact going into 2026

Tariffs haven’t had a major impact on home prices yet, but some industry stakeholders expect some noticeable inflationary pressures starting next year. PulteGroup Executive vice president and CFO Jim Ossowski said during an October earnings call that tariff impacts could partially take effect at the beginning of 2026.

“At this time, we estimate that tariffs will effectively have little to no impact on our closings in Q4 of 2025, but they could increase build costs by roughly $1,500 per home starting in 2026,” he said. 

Tariffs often take some time to affect the marketplace, Dietz explains. Despite the recently imposed tariffs on Canadian lumber, for example, lumber prices are actually down from a summer peak and are significantly less than peak levels seen during 2021 and 2022.  

“The impact will grow over time. Wherever you walk in the supply chain, the ability of importers to eat the tariffs is diminished, and so there’s more of an aftereffect of the underlying tax,” Dietz said. 

As far as other construction materials are concerned, it’s a mix. Steel prices spiked after the tariffs went into effect in June, but have since declined and are actually down year-over-year. The price of aluminum, on the other hand, has steadily increased since April. 

“You have to remember that economics is not accounting. Economics is a behavioral science, and what we’re trying to do is understand how people respond to things. And when we’re forecasting, we’re forecasting how they’re likely to respond to tariffs. And we simply haven’t seen the inflation that we’ve expected to see,” Case said, adding that there is still a lot of uncertainty going into next year. 

Small builders would be hit harder by tariffs 

Homebuilding as a whole will likely feel the impact of tariffs, but smaller builders would likely be hit the hardest. 

“It’s going to affect the smallest contractor first, and then it’s kind of a lagged effect moving up through the size of various residential construction firms: small homebuilder, regional homebuilder and national homebuilder. And the reason why is that those national builders are going to tend to have long-term contracts,” Dietz said.