How New Tariffs Are Impacting Home Buying Costs: What You Need to Know

Introduction

The recent implementation of new tariffs is causing a ripple effect throughout the housing market, but the most significant impact is being felt in the cost of new builds rather than existing homes. With tariffs specifically targeting imported construction materials like steel and lumber, the cost to construct new homes will likely rise. This increase is putting pressure on builders and could potentially reduce the number of new builds that enter the market.

In this blog, we'll break down how these tariffs are affecting the housing market, especially for those looking to buy new homes, and discuss what this means for buyers in 2025.

What Are the New Tariffs?

The new tariffs introduced by the Trump administration specifically target imported construction materials, including steel and lumber. As a result, builders across the country are experiencing a significant increase in costs.

According to a report from Realtor.com, the price hike could add as much as $9,000 to the cost of constructing a new home. Builders are now grappling with whether to absorb these additional expenses or pass them on to homebuyers, which could lead to higher listing prices for new builds.

Quote from Realtor.com: "The increased cost of imported materials means higher prices for new builds, renovations, and infrastructure projects."

Mortgage Rate Dynamics: A Roller Coaster Ride

While new build costs are rising, mortgage rates have been less predictable. Initially, rates dipped, giving buyers a brief window of opportunity. However, just as quickly, they rebounded.

According to Mortgage News Daily, "The net effect is that we've moved from 2025's lowest rates to highest since late February in the space of 24 hours. That said, today's highs are right in line with many other days from the past several weeks."

This volatility means that buyers who were hoping for continued rate relief are now facing a more familiar landscape. While rates are not dramatically higher, they have returned to levels that many have become accustomed to in recent months.

What Does This Mean for Homebuyers?

For those specifically looking at new builds, the increased construction costs are likely to be passed on in the form of higher sale prices. Buyers who had been considering new construction might find themselves reevaluating their options, including looking at existing homes or waiting to see if costs stabilize.

Additionally, the rebound in mortgage rates means the excitement around lower rates was short lived. 

Conclusion

The impact of the new tariffs is primarily hitting the new construction market, where increased material costs are driving up prices. While mortgage rates initially dipped, they have since returned to levels that have been common in recent months.

As we head into what I still expect to be a busy spring market, buyers should be prepared for rising prices in the new build sector. If fewer new homes are constructed due to cost increases, the demand for existing homes may rise, leading to potential price increases in that segment as well.

📩 Considering your next move? Let’s discuss the best strategy to navigate these changing conditions. Reach out today!