We’ve heard a lot about how President Trump’s tariffs could impact the price of groceries, electronics, and clothing – But what about the housing market?
Trump’s tariffs on imported goods, particularly those from Canada and Mexico, are likely to have a significant impact on the American housing market.
Why?
Tariffs on steel, aluminum, and lumber from Canada and Mexico will increase the cost of these essential construction materials. A substantial portion of them are imported from those countries.
As a result, builders are likely to pass these increased costs on to homebuyers, leading to higher home prices. This could exacerbate affordability issues in the housing market, especially for first-time buyers.
Tariffs could also lead to a slowdown in housing construction due to increased costs and supply chain disruptions. This could result in a shortage of new homes, further tightening the housing market. Combine that with the overall uncertainty and volatility surrounding tariff policies, and we could see declines in homebuilder stocks due to decreased investor confidence and builder sentiment
But not all areas will be impacted equally
The impact of tariffs may vary by region. For example, areas like Michigan, Maine, Arizona, and Texas, which rely heavily on cross-border trade for materials and goods, could experience significant economic disruptions.
Overall, while tariffs may aim to bolster domestic industries, their implementation could lead to increased costs and reduced affordability in the housing market, potentially slowing down construction and affecting economic growth.