Tariffs Add New Strain to an Already Pressured Housing Market

America’s housing market, already stretched thin by high prices and limited supply, is feeling new pressure from tariffs. As President Donald Trump's evolving trade policies ripple through the economy, real estate insiders warn that the effects on buyers, sellers, builders, and lenders could be significant.

Rising costs for construction materials and economic uncertainty are intensifying existing affordability challenges. Import taxes on key building products such as wood, metal, plastics, and glass are poised to drive up the costs of both new home construction and renovation projects. On top of that, volatility in mortgage rates is making financing even more unpredictable.

Builders Brace for Increased Costs

Home builders are among the first to feel the impact. Raw materials crucial to construction are becoming more expensive, particularly if proposed tariffs move forward.

The U.S. is heavily dependent on imported lumber, which accounts for roughly 30% of the nation's supply, according to the National Association of Home Builders (NAHB). While lumber from Canada — the source of about 80% of U.S. softwood imports — had previously been exempt from additional tariffs, a recent Commerce Department report suggests that could soon change, potentially doubling import taxes on Canadian lumber.

And lumber isn’t the only concern. Tariffs on Mexican goods could inflate the prices of stone tiles, while European-sourced granite and marble are also under threat. Meanwhile, industry-specific tariffs on metals like copper — along with existing levies on steel and aluminum — are adding even more cost pressures across the construction sector.

Home Renovators Also Squeezed

It's not just new builds feeling the heat — renovators are facing rising costs too. Although they rely less on raw lumber, renovators depend heavily on imported fixtures, appliances, and plumbing materials.

China is a key supplier for many renovation products, including glass, cabinetry, and other finishes. Eli Moyal, founder and COO of Chapter, a renovation project tracking service, noted that a significant share of both rough and finished materials used in projects comes either directly or indirectly from China.

“We're already seeing project costs rising between 10% and 15% due to tariffs,” Moyal said. However, the full burden isn’t immediately passed on to the homeowner. Manufacturers, distributors, builders, and clients are all absorbing portions of the higher costs, softening but not eliminating the sticker shock for consumers.

Volatile Mortgage Rates Complicate Buying

Beyond construction and renovation, buyers and mortgage brokers are wrestling with another challenge: rapidly shifting mortgage rates.

Tariff-related uncertainty has roiled financial markets, pushing up Treasury yields — which heavily influence mortgage rates. The 10-year Treasury yield spiked as high as 4.59% before retreating slightly, causing mortgage rates to climb to over 7%, up from about 6.7% just a week earlier.

Phil Crescenzo Jr., vice president of Nation One Mortgage Corporation’s southeast division, explained that this volatility is making it difficult for borrowers to lock in rates.

“If you're trying to secure a mortgage within just a few days, your rate could swing by half a percent or more — that’s a huge difference,” Crescenzo said.

A More Challenging Road Ahead

With tariffs raising material costs and fueling financial instability, the already challenging path to homeownership could become even steeper. Builders may slow new construction, renovators may push project budgets higher, and buyers may face tougher lending conditions — all of which could weigh on a housing market that’s already testing its limits.