California Construction News staff writer
With the next wave of tariffs from the Trump administration starting April 2, builders are facing the prospect of stopping or slowing construction projects as prices for materials continue to rise.
California builders are already dealing with increased prices for lumber and gypsum, and they are bracing for “significant increases” due to new tariffs next month.
Economic uncertainty, the threat of tariffs and elevated construction costs pushed builder sentiment down in March, according to a report from the National Association of Homebuilders (NAHB), even as builders express hope that a better regulatory environment will lead to an improving business climate.
“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “At the same time, builders are starting to see relief on the regulatory front to bend the rising cost curve, as demonstrated by the Trump administration’s pause of the 2021 IECC building code requirement and move to implement the regulatory definition of ‘waters of the United States’ under the Clean Water Act consistent with the U.S. Supreme Court’s Sackett decision.”
The latest HMI survey also revealed that 29% of builders cut home prices in March, compared to 26% in February. Meanwhile, the average price reduction was 5% in March, the same rate as the previous month. The use of sales incentives was 59% in March, unchanged from February.
“Construction firms are facing added cost pressures from tariffs,” said NAHB Chief Economist Robert Dietz. “Data from the HMI March survey reveals that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions.”
The HMI index gauging current sales conditions fell three points to 43 in March, its lowest point since December 2023. The gauge charting traffic of prospective buyers dropped five points to 24 while the component measuring sales expectations in the next six months held steady at 47.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell three points in March to 54, the Midwest moved three points lower to 42, the South dropped four points to 42 and the West posted a two-point decline to 37.
HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS.
U.S. builders rely heavily on raw materials, appliances and many other components made abroad. About 7.3% of products used in single-family home and apartment building construction are imported, NAHB said. Of those, nearly a quarter come from Canada and Mexico.
Both countries account for 70% of the imports of lumber and gypsum. Canadian lumber is used in everything from framing to cabinetry and furniture. Mexican gypsum is used to make drywall.
Builders in the March survey said tariffs would likely boost prices $9,200 per home, according to Robert Dietz, chief economist at NAHB.
The White House on March 6 delayed for one month 25% tariffs on certain imports from Mexico and Canada. One of those imports is softwood lumber. Tariffs already in effect include 20% China imports and a 25% tariff on steel and aluminum imports — 50% on those from Canada — which started March 12.
