According to estimates by the National Association of Home Builders (NAHB), $204 billion worth of goods were utilized in the construction of new multifamily and single-family housing in 2024. Of these, $14 billion worth of goods were imported from outside the United States, indicating that approximately 7% of all materials used in new residential construction originated from foreign countries. As a result, tariffs imposed on imports from across the globe lead to significant price increases within the industry.

“Construction depends more on imported goods than many other industries,” says Associated General Contractors of America chief economist Kenneth Simonson. “Canadian softwood lumber, for instance, is very important, especially to the single-family home building industry. If that gets cut off [due to the imposed tariffs], it’s going to make a difference in how quickly the projects can be built and what the substitute products would be.”

Softwood lumber is vital for home building, and Canada provides approximately 85% of the U.S. softwood lumber imports. Ideally, sourcing more softwood lumber domestically would benefit builders and home buyers, but United States sawmills do not have the capacity to meet demand at this time.

The Commerce Department already imposes 14.5% tariffs on Canadian lumber and plans to increase the tariffs to 34.5% later this year. This is separate from the global reciprocal tariffs President Trump initially announced in early April and later paused. In January, NAHB sent a letter to the White House urging the president to exempt critical building materials from his proposed 25% tariffs on Canadian and Mexican goods. Fortunately, the organization and American consumers scored an important win when the President chose to continue current exemptions for Canadian and Mexican products, including a specific exemption for lumber from any new tariffs.

NAHB chairman Buddy Hughes released this official statement to the media in response to President Trump’s decision to continue these exemptions. “While the complexity of these reciprocal tariffs makes it hard to estimate the overall impact on housing, they will undoubtedly raise some construction costs. However, NAHB is pleased President Trump recognized the importance of critical construction inputs for housing and chose to continue current exemptions for Canadian and Mexican products, with a specific exemption for lumber from any new tariffs at this time.”

The current exemptions for Canadian products have benefited Pittsburgh home builders and consumers. “The lumber coming from Canada is one of the largest expenses for the homes we build,” says Jeff Costa, founder of Costa Homebuilders. “Fortunately, we’re currently sheltered from some of the big tariffs.”

Construction Supply Issues Beyond Lumber

Although the lumber hasn’t currently been affected at this time, smaller items required for custom building are rising due to the tariffs. “Simple items like lock sets used for the locks on the doors of the homes have increased in cost by 15% because of the tariffs,” says Costa. “A lot of those things are a very small percentage of the cost of building a house. Currently, home prices are not being dramatically affected since these are minor parts of the construction.”

The situation is similar for Pitell Homes. “We’re a small builder and typically do 25 to 30 homes a year,” says Pitell Homes president Shaun Seydor. “There has been a lot of speculation and hysteria with news stories, but for the tariffs to further impact our business, that has to trickle all the way down through the supply chain. So far, we have seen a little bit of movement and a modest increase of 6 to 10% on metal products.”

Another construction supply issue is aluminum. “Nearly all of the aluminum that’s used in the United States comes from abroad, particularly aluminum from Canada,” says Simonson. “While a lot of aluminum goes into the automotive or aerospace industries, aluminum is important for architectural features in building. Then there is a wide range of appliances, equipment, and machinery used in the construction industry that comes from a variety of countries. Much of it comes from China, so the proposed 145 percent tariff on China—or whatever percentage it ends up being—will definitely drive up the cost of a lot of construction projects.”

Dealing with Uncertainty and Change

“I think the biggest thing is the constant uncertainty and change,” says Liam Brennan, vice-president of Infinity Custom Homes. “Over the past several months, there have been many discussions, e-mails, and letters from manufacturers talking about tariffs. But to this point, fortunately, there has been little actual impact on our customers.” 

With most of the manufacturers sourcing supplies from overseas, determining the impact relies heavily on their calculations and projections. “Many of the manufacturers have been able to figure out what the additional tariff costs are going to be,” says Brennan. “In doing so, they are able to give us a little bit more clarity as to what the percentage of increase is going to be and, almost more importantly, when the increases will go into effect.”

Impact on Current and Future Home Buyers

As the constant back-and-forth negotiations and discussions linger on, the most important question is how this affects current and future home buyers. Infinity Custom Homes—a semi-custom builder—often manages a considerable backlog. “From the time someone buys a home and locks in pricing to the time we actually start building the home can be as much as four to five months,” explains Brennan. “Once we start building, it can be nine to ten more months. So, needless to say, that’s a long time with customers being locked in with pricing that we’ve committed to them. As the builders, we’re out there potentially taking the increases that may or may not come.” Despite the impact the tariffs could have on the builders, buyers already under contract will not be affected. “If someone bought a house from us, we won’t go back to them and pass on tariff costs. We might get increases from a vendor, which is a little scary as a builder, but this is something we felt like we had to do to reassure our customers.”

The same policy is maintained at Pitell Homes. “Our homes take anywhere from six to eight months for construction, so when we sign a contract with a customer, we guarantee their price. We also have some long-term agreements for pricing with some of our vendors,” says Seydor.

Adjustments for Builders

Although the uncertainty regarding proposed tariffs, trade negotiations, and policy changes impacts all businesses, builders have various strategies available to navigate this unique scenario.

Communication with vendors provides details like how much inventory they have, where it is sourced from, and what options are available to push the impact of the tariffs further down the road. “We work with our vendors to determine which manufactured goods are made overseas and which are made domestically, like lighting fixtures, plumbing, appliances, flooring, etc.,” shares Brennan. “Then, we work with our vendor partners to minimize the impact by determining how to distribute the additional costs. Then we increase prices in preparation for this impact, keeping in mind that the market will only absorb
so much.”

Costa also monitors the constantly changing issues and has changed his building practices slightly to manage the uncertainties. “We used to give someone a price and say the price was good for 60 days,” he explains. “Now we’re saying the price is good for seven days. If the buyer wants to move forward, they can lock in that price, and then I will lock in my vendors.”

Simonson notes, “What I hear contractors talk about is putting larger contingencies into their bids and encouraging owners to agree to earlier purchases of materials if they’re the sort of thing that can be stored. If there is a site that can store materials, the contractors will need an agreement on who will pay for the use of that storage facility, the insurance that may be required, and the risk that the specifications or the quantity might turn out to be wrong. So many projects go through modification as they’re underway or after the initial signing of a contract. Those are some of the things that are worth discussing between owners and contractors and always worth having communication on as early and as frequently as possible between the designers, the fabricators, the contractors, and the subcontractors. While those rules apply in any case, the consequences of not following them are greater in this setting.”

Additional Effects of Uncertainty

During periods of uncertainty, consumers tend to avoid big decisions, including home purchases. Mortgage interest rates are a major factor in the housing industry. “One of the big drivers of mortgage rates is the ten-year treasury yield, and that has been picking up. If that goes up, mortgage interest rates increase,” says Costa.

Beyond mortgage interest rates, the longer the tariffs last, the more extensive uncertainty will be. According to reports from NAHB, as businesses are affected by rising costs, the stock market is likely to fall. An estimated 60% of United States households have an interest in the stock market. If stock prices fall, the housing market demand will also fall. Moreover, in times of uncertainty about their economic future, consumers are less likely to buy or sell homes.

“While tariffs aren’t necessarily affecting land prices, tariffs can affect interest rates, and if those rates keep going up, you’re going to get a lot less people developing land,” says Costa.

Looking Ahead to the Future

For years, NAHB has actively opposed tariffs due to their negative impact on housing affordability and the additional tax tariffs impose on American builders, home buyers, and consumers. In the future, the organization intends to collaborate with key stakeholders to abolish tariffs on building materials. Additionally, it will concentrate on initiatives aimed at enhancing building material supply chains within the United States to reduce building supply costs.

Interested home buyers are generally not letting the tariff talk discourage them from building a new home. “The subject has come up a few times with buyers through the course of the year, but they’re definitely in the minority,” says Seydor. “The much stronger conversation piece is interest rates, which directly impact monthly mortgage payments, affordability, and purchase power.”

Western Pennsylvania continues to attract buyers. “We are still seeing enough confidence in our customer base that they are willing and able to move forward despite the uncertainty,” says Brennan. “Besides, there’s always going to be some uncertainty, so we try to focus on things we can control, which is building a very good product and providing a good value for the customer. If you do that, despite all the noise and uncertainty, you’ll find buyers out there, and we’ve actually had a very good first half of the year.”  NH