Tariffs on key home-building materials — particularly softwood lumber — could significantly increase the cost of new homes in the United States. With the country already facing a housing shortage and widespread affordability challenges for many, new tariffs could price out over 100,000 more prospective home buyers.
Home builders reported in April 2025 that existing tariffs had already increased costs by $10,900 per home, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Here’s how tariffs could impact house prices and what house hunters should be on the lookout for.
Why tariffs impact home prices
Home builders rely on imported materials throughout new homes, from structural framing to finishing touches. Tariffs could push up prices throughout the home-building supply chain and raise the price tag for hopeful home buyers.
- Lumber: The Trump administration has opened an investigation into whether imports of lumber and related products threaten U.S. national security — an inquiry that could result in tariffs. New duties on Canadian softwood lumber, the primary source of U.S. imports, could lead home construction costs to surge, according to the National Association of Home Builders (NAHB).
- Lime and gypsum: More than 70% of lime and gypsum, critical for drywall and plaster, are imported from Mexico. The Trump administration has threatened to impose a 25% tariff on Mexican goods.
- Appliances and other items: More than half (54%) of household appliances come from China, goods from which are subject to a 125% tariff. The U.S. imports more than $500 million worth of gas ranges and approximately $3 billion in light fixtures, AC units, thermostats, and ceramic bathtubs from Mexico. Tariffs on those products would increase construction costs and make remodeling more expensive for existing homeowners.
Tariffs could add thousands to the cost of a new home
Recent tariffs have already pushed up construction costs by an estimated $10,900 per new home, according to the NAHB. This comes alongside a 34% rise in building material costs since late 2020. With limited domestic alternatives for many materials, additional tariffs threaten to drive prices even higher.
Softwood lumber is especially vulnerable. Imports account for 29% of U.S. softwood lumber consumption, most of which comes from Canada. U.S. supply cannot meet demand, and lumber from Canadian spruce-pine-fir species can’t easily be replaced. A proposed 25% tariff on Canadian goods or tariffs stemming from the 232 national security investigation into lumber imports on top of existing duties could add $1,081 to the cost of each new home, according to UBS estimates.
Meanwhile, tariffs on goods from China and Mexico are also hitting builders hard. China supplies 27% of homebuilding-related imports and is subject to 125% tariffs. Mexico provides 11% and faces a potential 25% tariff. Together, these measures could significantly increase costs for critical products like drywall, appliances, and HVAC systems.
What tariffs mean for home buyers and what to watch for
For home buyers, tariffs translate to higher prices and fewer options. Builders facing higher construction costs may have no choice but to pass those increases on to consumers. The NAHB estimates that a $1,000 increase in house prices would push 115,593 prospective home buyers out of the market. For buyers that can stomach the price increase, they may still have to compromise size, location, or features.
Prospective home buyers should keep an eye on trade developments, especially new tariffs on Canadian lumber, Mexican imports, or Chinese goods. These policy shifts can directly impact housing costs, remodeling expenses, and appliance prices.
Tariffs generally have an inflationary effect, which could result in the Federal Reserve keeping interest rates higher for a longer period of time, or raising them. That usually means higher mortgage rates. As a result, tariffs could mean that home buyers face not just more expensive homes, but higher borrowing costs to finance them.