How Tariffs Can Effect your new Home Build Budget
Three main points:
High housing costs and higher mortgage-related expenses make buying and renovating homes more expensive and harder to afford.
Rising living costs push construction labor prices up, increasing renovation and building costs.
Business challenges in the construction industry — poor management, uneven practices, and closures — reduce the labor supply and raise prices further.
If you’ve been thinking about renovating your home, it helps to know what drives the cost. Housing prices are near all-time highs. Mortgage interest rates are higher than before COVID, though they are slowly falling and more stable now. That means even if you have a reasonable interest rate, up-front costs like a down payment and property taxes are higher, so owning a home is more expensive. This makes it harder for people to save enough to buy a bigger home or one in a better neighborhood. Wages have not risen as fast as costs for labor, materials, taxes, and mortgage interest. As a result, even a starter home is harder to afford for many Americans.
This creates a vicious cycle. When housing, groceries, medical care, and child care all cost more, everyone who works in construction must charge more to cover their living expenses. Construction is often seen as low‑skill, low‑wage work, but workers need higher pay just to get by. Small remodeling businesses are squeezed: they must stay competitive while trying to make a profit. Many run their businesses differently — some lack strong business skills, good communication, or fair treatment of employees. Without a clear blueprint for running a successful company, some businesses fail because they can’t afford workers or can’t make the venture worthwhile. That leads to fewer workers, higher prices from the businesses that remain, and more pressure on the remaining workforce, who are often asked to do more for less.
Understanding these three forces — expensive housing, higher labor costs, and business instability in construction — explains why renovation costs are rising. Knowing this can help homeowners set realistic budgets, plan longer timelines, and ask contractors clear questions about pricing, timelines, and work quality before starting a project.
Article from the New York Times talks about the impact of tariffs on new home construction.
Article from National Association of Home Builders, Regarding Tariffs on Lumber, Kitchen Cabinets and Furniture.