The Impact of Upcoming Tariffs on the Real Estate Market

The recent announcement of new tariffs by President Donald Trump has significant implications for various sectors, including real estate. These tariffs, set to take effect in March 2025, impose a 25% duty on imported steel and aluminum products. While intended to protect domestic industries, these measures are expected to influence construction costs, housing prices, and the broader real estate market.

*Please note: this article isn't a political opinion! We are just sharing relevant information, analysis and possible economic effects.

Sources: NAR, Corelogic

Rising Construction Costs

The construction industry relies heavily on steel and aluminum for building infrastructure. With the imposition of a 25% tariff on these imported materials, builders anticipate increased expenses. The National Association of Home Builders (NAHB) has expressed concerns that these tariffs will elevate residential construction costs, potentially deterring new development and complicating efforts to address the housing affordability crisis. 

Potential Increase in Housing Prices

As construction costs rise due to higher material expenses, these additional costs are likely to be passed on to homebuyers. This scenario could lead to higher prices for new homes and renovations, further challenging affordability in the housing market. Analyses suggest that tariffs could push home construction costs up by 4% to 6% over the next 12 months, exacerbating the existing housing supply and affordability issues. 

Broader Economic Implications

Beyond direct construction costs, the tariffs may have wider economic effects. Increased costs for building materials can lead to delays in construction projects, reduced profit margins for developers, and potential slowdowns in new housing developments. These factors could contribute to a tightening housing market, with supply struggling to meet demand, thereby driving prices even higher.

Conclusion

While the intended goal of the tariffs is to bolster domestic industries, the ripple effects on the real estate market cannot be overlooked. Stakeholders, including builders, developers, and homebuyers, should stay informed about these developments and consider strategies to mitigate potential impacts on housing affordability and market stability.