How Tariffs Are Quietly Reshaping the U.S. Housing Market in 2025

The housing market has always been influenced by an interplay of factors—interest rates, inventory, sentiment from buyers, and regulations in localities. But in 2025, there is another powerful force that is in play: tariffs.

As the U.S. government has shifted in its trade policy with a stance that is aggressive regarding tariffs on imported goods—then paused them briefly for a 90-day window—the impact on the housing market has become hard to ignore. Price volatility, material delays, and rising interest rates are issues. Economic uncertainty also impacts builders, buyers, and investors alike. Here's the way in which tariffs, alongside the short reprieve, are reshaping the real estate landscape.

Tariffs levied upon necessary building materials including lumber, steel, aluminum, and copper have driven upward the cost of new home construction throughout the country. Tariffs have caused the average cost of new single-family homes to increase by about $9,200, says NAHB. Consumers mostly bear these price increases, worsening already difficult affordability.

HousingWire reported that prices for imported steel and aluminum rose around 17% and around 22% respectively between January 2024 and March 2025, as U.S. tariffs made foreign materials more expensive. Builders find budgeting harder for projects, with prices for framing lumber, insulation, and plumbing parts all unpredictable.

This is problematic within high-growth markets like Denver, Phoenix, and Austin. Demand for new housing has remained strong in those markets, but construction costs now require higher list prices to maintain profit margins.

In a recent feature in the *San Francisco Chronicle*, economists estimated tariffs on Canadian, Mexican, and Chinese materials could increase the cost of a Bay Area home by up to 15%—and that’s in a market facing affordability challenges already sky-high.

Tariffs don’t just increase the price of goods—they additionally influence broader economic confidence and investor behavior. Upon markets' anticipation of a trade war, investors shift money into some “safe haven” assets. These investors often shift money into assets like U.S. Treasury bonds. That can cause yields to drop, with mortgage rates declining temporarily, also.

Mortgage rates dipped to a 2025 low of 6.48% earlier this month. The White House announcement of a 90-day pause on several key tariffs prompted this dip. However, that brief pause did not last. When the administration doubled down, setting a 145% tariff on Chinese goods and bringing back a 10% baseline tariff on goods from trade partners, rates rebounded. According to Inman, 30-year fixed-rate mortgages climbed swiftly back to 6.82%.

For most buyers, such volatility proves unsettling. Certain people view dips as buying opportunities, but many people hesitate to act when they fear rates could rise again—or that tariffs could push home prices even higher in the coming months.

In approximately early April 2025, President Trump issued a 90-day pause upon a portion of new tariffs. Housing economists initially saw it as a welcome reprieve. The optimism didn’t last long for them.

The pause excluded many impactful building materials. Materials, like Canadian softwood lumber, remain under a nearly 34.5% duty rate. Additionally, the policy lacks clarity for the long term—industry leaders have expressed frustration over the nature of stop-start current trade negotiations.

According to Inman’s analysis, many builders pause before starting new projects awaiting more predictable trade policy. As they argue, a 90-day delay does little for alleviating concerns regarding long-term planning, especially when material suppliers are dealing still with backlogs, labor shortages, as well as inventory hoarding due to fears of price.

U.S. policy may be domestic, yet the impact from it extends worldwide. Canada—America’s largest source for softwood lumber—saw a sharp drop with housing starts in addition to sales this March, the lowest figure in 16 years. Reuters noted that many builders within British Columbia are delaying certain projects until the cost for the exporting of lumber stabilizes.

China, though, is watching it all from the other side of the table. Because its real estate developers are still struggling through a post-COVID credit crisis, a further strain from trade tensions along with shrinking exports has pushed down new home prices during seven consecutive months. A weaker market in Chinese housing could reduce demand for investment properties in America and for international partnerships in construction.

In Denver, such impact of tariffs is subtle. Still, that impact is real. Builders are reporting somewhat thinner margins on a few new construction projects as well as lengthier timelines given supply chain instability. Local real estate agents, in totality, are factoring in construction delays as well as increased material costs, when advising clients; especially those who are purchasing new builds or else considering renovation-heavy homes.

REcolorado data reveals that average days in market for new construction has edged up a little, and builders are now more often offering closing cost incentives and design upgrades to reduce sticker shock for buyers.

Local agents also report now that international investors, who had been active in Denver’s high-end market, have been more cautious in 2025, particularly those with ties to China and Canada.

For most developers, tariff-related increases of cost represent a serious threat for profitability. Investors, on a large scale, are exploring more and more build-to-rent models as a way of recouping upfront costs of construction over a period, instead of relying on margins in sales that have been squeezed through materials inflation.

To hedge against volatile supply chains, HousingWire noted some publicly traded homebuilders are shifting toward institutional partnerships or multifamily development.

Meanwhile, smaller builders—particularly those operating across high-cost or land-restricted markets—are lobbying within for clearer long-term trade policy to actually help stabilize their business planning. The current climate, they thoroughly argue, makes it practically impossible for pricing homes or securing consistent vendor bids.

With the 90-day pause scheduled to expire in July 2025, uncertainty exists on the horizon. In the event tariffs are re-imposed or expanded, construction costs could spike again, as could also inflation; this might well prompt the Fed to re-evaluate its interest rate strategy.

Those buyers awaiting price falls might find themselves in a crosswind: lower demand could cool the total market slightly, but higher total costs and financing challenges might keep the overall inventory tight and prices sticky.

Tariff pressures might soften if Congress or the administration introduces longer trade agreements, or offers subsidies or tax breaks to U.S. material producers. However, those laws remain under debate around April 2025.

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Tariffs can seem like a trade policy issue, but their impacts hit home—literally. The materials for building homes across America, from lumber framing to wiring made of copper, are subject to politics internationally and to economic strategy. For most buyers and most sellers navigating the current market of today, it’s really more important than previously to stay most informed and consult along with professionals who truly understand just how national and global trends could influence the actual value of a single home.

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