Homebuilders are starting to feel the squeeze of new import taxes as tariffs begin to show up in construction budgets across the country, according to fresh data from a national trade group released Wednesday.

Input costs for builders surged during the pandemic when cheap interest rates fueled a wave of new residential projects. Demand for construction materials climbed sharply, even as global supply chain disruptions restricted supply, sending prices soaring.

Today, prices for building materials remain well above pre-pandemic levels — and now, the cost burden of tariffs is adding another layer of uncertainty for the housing industry.

Minnesota is facing the same challenges as the rest of the U.S., with a persistent housing shortage at all price points. Low-income families are hit hardest, and rising costs for builders could mean higher home prices and rents as developers look to recover their expenses.

President Donald Trump’s trade policies — which have included rolling back, canceling, and reinstating various import taxes — have made it increasingly difficult for builders to plan ahead. Some of those tariffs are still in effect or about to take effect.

The National Association of Home Builders (NAHB) reports that the new residential construction price index rose 2.6% from June of last year. Replacement parts for construction machinery, such as saw blades, are 24% more expensive than a year ago, while prices for some metal products have risen by 10% or more. A 50% import tax on certain metals is slated for August.

“Many builders stocked up on important inputs in the first half of the year, anticipating higher future prices, and are still working through that inventory,” said Jesse Wade, director of tax and trade policy analysis for the NAHB, which published the report this week. Wade added, “Consumers may not see the impact on home prices until later this year.”

Wade expects builders’ costs to keep climbing through the summer as new tariffs take effect but noted that these increases should be milder than the huge supply chain-related spikes that rocked the industry in 2021 and 2022.
Housing advocates warn that rising construction costs could put even more pressure on the nation’s tight housing supply, pushing first-time buyers and renters further out of reach in an already strained market. Some developers are exploring alternative building materials and negotiating long-term supply contracts to hedge against future price shocks.

Industry leaders say they are also watching the upcoming election season closely, as any changes in trade policy could affect future projects and pricing stability. Meanwhile, builders continue to urge policymakers to balance trade protections with the urgent need for affordable housing.

Originally reported by Madison Mcvan in Minnesota Reformer.