The economic uncertainty caused by President Donald Trump’s tariff-fueled trade policy is putting builders and prospective homeowners in a tight spot.
We’ve all been living through tariff whiplash over the last week, and the latest news coming out of Wednesday is that Trump is pausing many of the higher tariffs he announced on “Liberation Day” last week. Most nations are still subject to his 10% across-the-board tariff, but with the exception of China (with whom the U.S. is teetering on a full-blown trade war), higher hikes are being put on the shelf for 90 days.
All of this has caused a high degree of economic uncertainty across the globe, and there are serious implications for the housing market in the United States. One big factor homebuilders have been having to contend with is the price of Canadian softwood lumber, which has been a sore point between the United States and Canada for decades.
Broader tariffs on imports from dozens of other countries, though, will also have a downstream impact on construction costs and the ultimate price of homes. Even if the higher tariffs are on hold, 10% is still 10%, and they will affect imported commodities like raw steel, concrete, gypsum (used in drywall), and home appliances.
‘The Uncertainty Is the Hardest Part’
Note: The following interviews were conducted on Monday and Tuesday, before Trump paused most of his “Liberation Day” tariffs for 90 days.
Dallas builder Joshua Correa has been delivering high-end custom homes in D-FW for more than two decades through his company Divino Homes, putting up a dozen or more spec homes every year. He’s also got a foot in commercial development with Power Construction Group.
Back in January, Correa said he started receiving letters from suppliers about anticipated price hikes for some of his construction materials.
“He’s going up 5%, then 7%, and I’m like, when is this going to stop?” he said, projecting that a home that cost him $500,000 to build last year will cost an extra $12,000 a month from now.
“I’m starting to talk to my suppliers and trying to understand how I’m going to get impacted with appliances, with hardware, with gypsum. Do I need to start ordering this material ahead of time and lock it in to make sure that I don’t have any more delays because I have a carrying cost on each home,” Correa said.
Alan Hoffmann of Hoffmann Homes is also trying to figure out how much he’s going to have to add to his projects as this or that import becomes more expensive under whichever tariff regime the president ends up landing on for each country.
Hoffmann estimated a similar price hike on his builds: a minimum of $25,000 on a roughly $1 million home. He based his calculation on anticipated increases in the cost of imported raw steel and fixtures that include metal. He also pointed to possible “ghost increases” (price gouging) on domestically-produced goods, noting that he observed the phenomenon during the COVID-19 pandemic.
“The uncertainty is the hardest part,” he said.
D-FW Market Slow-Down in the Cards
While tariffs drive up the cost of imports, there are signs that both investor and consumer confidence is being shaken. For prospective homebuyers considering one of the biggest economic decisions of their lives, that could mean hitting the pause button on moving.
Correa said his spec homes are no longer flying off the shelf like they used to. He pointed to his latest two builds, which have been sitting on the market for at least a month.
“There’s been a lot of foot traffic, but it seems like there’s a lot of people just looking. Nobody’s really committing. I don’t know if the consumers are expecting lower interest rates or they’re waiting to see if the price is going to get lower or they’re just concerned about [the overall economic situation],” he said, noting he’s got more projects breaking ground just around the corner.
Hoffmann said he believes there will be a significant decrease in the number of prospective homebuyers. And many of those who do still want to buy a new house might find themselves priced out due to the pricing pressures caused by U.S. tariff policy.
He referred to a study by the Texas Real Estate Research Center at Texas A&M University that found that for every $1,000 added to the price of a home in Texas, more than 10,000 prospective buyers are priced out.
“The reality is there is still going to be a portion of the marketplace where people are going to make that decision to buy no matter what’s going on,” he said. “But that is a smaller number than the aggregate of the populace that does want to buy.”
Deals will still be made it seems, but the only deals that will dampen all this price volatility are the ones made out of the Oval Office.
