Analysts saw tariffs amplifying an already severe housing supply crunch
Housing advocates and market analysts warned that the Trump administration’s expanded tariffs on key building materials have further squeezed already stretched United States homebuilders, threatening to widen the nation’s supply gap and keep ownership out of reach for many first-time buyers.
For two decades, home prices and rents have outpaced incomes, with construction never fully recovering from the Great Recession.
The Center for American Progress (CAP) pointed to estimates of a national housing deficit of “2 million units or more by some estimates,” a shortfall it said required sustained above‑trend building to close.
Instead, it argued, tariffs on materials such as lumber, copper, steel and cabinets have pushed costs higher just as demand remains strong.
“The Trump administration’s tariffs are making it more expensive to build homes, deepening the U.S. housing shortage,” CAP said in its analysis.
It added that “tariff‑induced higher building costs will lead to 450,000 fewer homes being built over the next five years, exacerbating the housing supply shortage,” and warned that housing costs are already “at an all‑time high.”
In CAP’s modeling, tariffs announced since January 2025 are expected to add roughly $27 billion a year to the cost of constructing new homes and apartments, effectively raising new‑build costs by about 3.3% and translating to roughly $17,500 more per home at recent building rates.
It said that would “put homeownership further out of reach for millions of Americans” if supply fails to keep pace.
Industry groups have raised similar alarms about trade policy, even as they debated its precise role in affordability. Data from the National Association of Home Builders showed builders estimated “a typical cost effect from recent tariff actions at $10,900 per home.”
Some mortgage market analysts has also cautioned that tariffs could lift construction costs by about 3% by year‑end, pointing to pressure on materials, appliances and builder sentiment.
Debate over lumber
The impact of duties on Canadian softwood lumber – which accounts for nearly a quarter of US supply – remains contested.
One industry coalition argued that claims tariffs are driving up housing costs are “unfounded scare tactics” and credited strict trade enforcement with boosting domestic production.
Other analysts highlighted how volatile lumber prices, higher financing costs and tariff uncertainty together weigh on builder confidence and starts.
What it meant for mortgage professionals
For lenders and originators, the tariff debate goes beyond politics. If higher input costs continue to suppress new construction, experienced market participants expect tighter inventories, firmer prices and fewer entry‑level listings, even as elevated rates cool some demand. That mix risks extending a pattern in which borrowers qualified on paper but struggle to find homes they could buy.
Whether policymakers choose to revisit tariff levels on critical building inputs or offset them through targeted incentives, the underlying message for the mortgage trade is clear: without a sustained expansion in supply, trade shocks that raise construction costs, even incrementally, have the potential to echo through origination pipelines for years.
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