If you thought home prices were finally going to cool off, think again. A new wave of tariffs on Canada, Mexico, and China could send costs soaring—especially for first-time buyers who are already struggling with affordability.
These tariffs aren’t just political chess moves. They directly impact the materials that go into building homes, from lumber to steel to essential appliances. And when those prices go up? Home prices follow.
So, what does this mean if you’re looking to buy soon? Let’s break it down.
Why Tariffs matter for homebuyers
Most of us don’t think about global trade when we’re house hunting, but behind every home is a supply chain. The wood for your floors, the drywall in your walls, the steel in your appliances—all of it comes from somewhere.
With these new tariffs, the cost of those materials is expected to rise, making it more expensive for builders to construct homes. And since builders aren’t in the business of losing money, they’ll pass those costs onto buyers.
This is especially concerning for new construction homes, which are a key source of inventory in today’s tight market. Fewer new homes mean even more competition for existing homes—something first-time buyers are already feeling.
Materials impacted by new tariffs
🌲 Lumber (mainly from Canada) – Used in framing homes, cabinets, flooring, and furniture.
🏗️ Steel & Aluminum (from Mexico and China) – Used in home construction, appliances, and infrastructure.
⚙️ Manufactured Goods (from China) – This includes HVAC systems, home fixtures, and furniture.
Historically, tariffs on Canadian softwood lumber have led to increased costs for U.S. homebuilders. For instance, previous tariffs contributed to a 15% rise in lumber futures (NAHB.org August 2024) directly impacting construction expenses.
Homes will get pricier—fast
If you’re considering a new-build home, brace yourself. Lumber, steel, and aluminum are all on the tariff list, and those materials make up a big chunk of construction costs.
Higher prices aren’t just speculation. We’ve seen this before. The last time tariffs hit Canadian lumber, the cost of building a home jumped by thousands of dollars. Some builders slowed production, while others pushed their prices higher to cover costs.
Expect to see both happen again: fewer new homes being built and the ones that are? More expensive.
➡️ More demand for existing homes → prices rise.
➡️ Bidding wars become more common → making it harder for first-time buyers to compete.
➡️ Sellers may hold off on moving → keeping inventory low and driving prices even higher.
If new homes become less affordable, more buyers will turn to existing homes instead. Sounds like a simple solution, but there’s a catch—inventory is already painfully low.
This shift in demand could push prices even higher, leading to more bidding wars, fewer homes available in entry-level price points, and an even tougher market for first-time buyers.
And don’t expect current homeowners to rush to sell. If it costs more to build or renovate, many will stay put, further tightening supply.
Thinking about a renovation? Get ready to pay more
Not looking to buy but planning a renovation? The same price hikes will hit you, too.
Lumber costs are already up, and with tariffs making imported materials more expensive, everything from kitchen cabinets to flooring is likely to see price increases. Even appliances—many of which are imported from China or use Chinese parts—could get more expensive.
If you’re on the fence about a remodel, you may want to lock in pricing sooner rather than later.
Tariffs on lumber, steel, and manufactured goods will likely drive up costs for home improvements, meaning:
🔺 Higher prices for kitchen and bathroom remodels.
🔺 More expensive flooring, cabinets, and fixtures.
🔺 Increased costs for DIY projects.
Will this affect mortgage rates?
It’s possible. Higher construction costs and rising home prices could fuel inflation, and the Federal Reserve watches inflation closely when setting interest rates.
If inflation remains high, the Fed might delay expected rate cuts, keeping mortgage rates elevated for longer. That means homebuyers could be hit with a double whammy—higher home prices and no relief on borrowing costs.
What should first-time buyers do?
If you’re in the market for a home, this news probably isn’t what you wanted to hear. But don’t panic—just be strategic.
If you’re financially ready, waiting may not help. Prices are more likely to rise than fall, and even if rates drop slightly, the increased competition could wipe out those savings.
Look for builder incentives, consider homes that need minor renovations (before those costs go up, too), and get pre-approved so you can move fast when you find the right home.
Related post:
The New Administration’s Housing Policies: What They Mean for First-Time Homebuyers
Conclusion
Tariffs may seem like a policy issue, but they hit homebuyers where it hurts—their wallets. Expect higher prices for new construction, increased demand for existing homes, and more expensive renovations.
If you’re serious about buying, staying informed and acting strategically will be key. The housing market is shifting, and those who plan ahead will have the best shot at landing a home before costs climb even higher.