President Donald Trump's announced tariffs on goods from Mexico and Canada could send home construction costs soaring to more than 5% this year, according to an analysis by CoreLogic.
The California-based data analysis company said it examined the potential impact of Trump's 25% tariffs on Canada and Mexico, which are now paused, on building costs and home prices.
The analysis "suggests that if implemented, these tariffs could push home construction costs up by 4% – 6% over the next 12 months as material costs adjust to the new landscape."
CoreLogic said the higher prices caused by the tariffs would be in addition to the annual increases in building materials that typically follow inflation.
"That could mean that in the short term, builders could face up to a 10% increase in material prices," the report says.
Making the situation even worse is that early indications from CoreLogic analysis that the prices of household appliances, lighting, and cabinetry could increase by 10% to 20%, "and potential new tariffs on Chinese steel could alter project budgets by double-digit percentages."
"Already, the average cost of new construction in the U.S. is $422,000. Adding in potential material cost increases from the tariffs would add between $17,000 and $22,000 to that price tag," the report said.
Trump this week said he will impose 25% tariffs on steel and aluminum imports.
The National Association of Home Builders said those tariffs will drive up construction costs, the opposite of the president's promise to ease the country's housing shortage.
"The administration's move to impose 25% tariffs on all steel and aluminum products imports into the U.S. runs totally counter to this goal by raising home building costs, deterring new development and frustrating efforts to rebuild in the wake of natural disasters. Ultimately, consumers will pay for these tariffs in the form of higher home prices," NAHB Chairman Carl Harris said.
