Yesterday, President Donald Trump announced sweeping global tariffs on imports from dozens of countries and territories around the world, ranging from 10% to 50%. With the stated aim of bringing production back to the United States and balancing alleged “unfair” trade balances, most predict that the new tax will trigger significant disruption to the global economy.
Major domestic stock indices plummeted after the announcement, with historic single-day declines in the Dow, S&P and Nasdaq at press time.
Notably, a significant portion of the tariffs on many countries will not go into effect until next Wednesday, April 9, though a baseline of 10% has already been implemented, according to the administration.
How will the new tariffs affect housing? While previous tariffs on Canada and Mexico had a more direct impact on the real estate industry, the new taxes might not be as devastating as they are for other industries, with National Association of Home Builders (NAHB) Chair Buddy Hughes writing in a statement yesterday that “the complexity of these reciprocal tariffs makes it hard to estimate the overall impact on housing.”
Realtor.com® Senior Economist Joel Berner agreed that the Canada and Mexico tariffs were more relevant to the industry, saying in a statement that the 10% baseline tariff that will hit those two countries is still significant.
“The ability of American homebuilders to produce affordable new inventory is directly linked to their ability to import key materials from our neighboring countries. We are encouraged to see that specific tariff hikes for home construction inputs from Canada and Mexico were not on the President’s agenda,” he said.
Berner cited a recent analysis from NAHB that found Trump tariffs (before the new ones announced yesterday) would add $9,200 to the cost of building a new home.
A survey last month from construction industry trade group Association of Builders and Contractors found that materials prices were already rising quickly, with construction trade businesses expecting their profit margins to shrink based on tariffs.
In the medium-term, tariffs will make getting desperately needed inventory online more expensive. How about the immediate impacts, though—assuming that the Trump administration doesn’t reverse course?
Redfin reported yesterday that instability caused by the new tariffs will almost certainly cause volatility in mortgage rates, and make the path of rate cuts from the Federal Reserve (previously forecasted as two or three 25-basis point reductions) more uncertain. Short-term economic damage is also expected to push up unemployment and inflation, which the report noted may or may not have a significant impact on housing, based on how persistent these changes are.
Melissa Cohn, regional vice president of William Raveis Mortgage, said in a statement that she expected a short-term drop in rates, but that trend wouldn’t last.
“When the higher costs of goods start to push up the rate of inflation, it is quite possible that rates will go back up. I expect to be on a mortgage rate rollercoaster for the next few months,” she said.
Chen Zhao, who leads the Redfin economic team, said that the odds of a recession in the next 12 months rose from 15% at the start of 2025 to 40% after the latest tariffs.
That larger economic picture might be the biggest indirect threat to housing, as consumers pull back from big decisions like buying or selling homes. Overall, annual home sales have failed to recapture a significant post-pandemic reduction, which was characterized by some economists as a “housing recession.”
But economists have also largely attributed the relative resilience of the housing markets over the last couple years to a strong labor market. A recession with a significant uptick in unemployment would certainly have a major impact on housing, but is unlikely to see the kind of pain inflicted by the Great Recession, as current homeowners are sitting on a lot more equity.
According to an analysis of the new tariffs by The Budget Lab, a policy research center run by Yale University, consumers are losing the equivalent of $2,100 in annual purchasing power just from yesterday’s tariffs, having already lost $3,800 from previous tariffs.
Another uncertainty acknowledged by housing economists is how—or even if—the new trade policies will be implemented. Trump has previously switched course on tariffs, though even the back-and-forth can cause prices to rise.
So far, housing advocates have stopped short of explicitly pushing back against the broader push for tariffs (the National Association of REALTORS® declined to comment for this story, and has so far not put out any statement or analysis), instead focusing on carving out imports that are most important to housing, which Trump has already demonstrated he is open to.
“NAHB will continue to work with the administration to find ways to increase domestic lumber production, reduce regulatory burdens, and create an environment that allows builders to increase our nation’s housing supply,” Hughes wrote.
