President Donald Trump's tariffs on imports of lumber and aluminum could send the U.S. housing market into a crawl, experts warn.
According to Redfin, the number of homes for sale jumped 13% in January, but homes were also sitting on the market seven days longer than they were last year amid higher prices and mortgage rates.
"I think there will be detrimental negative impacts on both supply and demand," said Mark Hamrick, a senior economic analyst with Bankrate.
On Monday, lumber prices rose to a 30-month high in anticipation of Tuesday's tariffs. The impact is not just in home building, but also in renovations, furniture and general construction.
Hamrick says home builders estimate it could cost 5% more to build a home if prices increase — adding nearly $3,000 to mortgage payments for homeowners each year.
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"I can imagine that some projects will be canceled. Some other projects that might have been envisioned will not happen. And then will the buyers show up? Or will there essentially be a buyer strike among homebuyers who would then look to existing homes for sale?" Hamrick said.
A recent Bankrate survey showed that 81% of aspiring homebuyers said down payments and closing costs are already a significant obstacle in buying a home, with 20% saying they will never be able to save enough for a down payment. These prospective costs could only make that endeavor more difficult, experts warn.
