How $10,900 in New Tariff Costs Could Reshape the Housing Market — Regional Effects Vary Widely

The U.S. government’s recent tariff escalations are creating a ripple effect through the construction industry. After boosting duties on imported steel and aluminum from 25% to 50% in June, federal authorities extended these levies to over 400 additional categories two months later—encompassing structural steel products, home appliance parts, and building equipment. The timing couldn’t be worse for an already stressed sector confronting labor scarcity, expensive borrowing rates, and persistent material inflation.

According to the National Association of Home Builders (NAHB), these tariff increases could inject approximately $10,900 into the per-unit construction expenses of an average dwelling. Yet what happens next remains uncertain: Will developers immediately pass these costs to buyers, or will market dynamics produce different outcomes across regions?

The Cost Squeeze: Where It Hits Contractors Hardest

Construction professionals encounter tariff impacts on their bid estimates long before homebuyers notice anything at the shopping stage. Albert Bou Fadel, founder and CEO of SmartBarrel, explains that metals penetrate virtually every construction component—from structural frames to rebar systems to mechanical installations. Since the nation sources roughly 80-85% of its softwood lumber from Canada, any tariff adjustment in that category alone can easily add several thousand dollars to a home’s foundation and framing.

The pressure extends well beyond timber. Domestic appliance manufacturers report that over 60% of major units sold nationally contain overseas-sourced elements or completed subassemblies. This creates a cascading effect: tariffs on imported wiring, fixtures, HVAC systems, and kitchen components immediately drive up retail prices. Even materials like concrete, primarily sourced domestically, face cost pressures through tariffed additives and imported machinery.

The genuine challenge emerges when rising material expenses eliminate a contractor’s operational cushion. When input prices jump, project delays, schedule conflicts, or quality rework become exponentially costlier. Work sites transform from forgiving environments into environments where every decision carries financial weight.

Decoding the $10,900 Figure

The NAHB calculation centers on approximately 7% of building materials flowing through import channels and the elevated 50% tariff now applying to numerous essential inputs. Industry observers view this as a reasonable directional estimate, though regional variation matters significantly. Properties featuring multiple appliance suites or elevated imported metal specifications may face substantially larger cost pressures. Conversely, modest starter dwellings relying predominantly on domestic supplies might experience smaller increases than the national average.

For prospective purchasers hunting homes for sale in brookings or similar regional markets, this distinction becomes particularly relevant—local supply chain composition directly influences how much new construction prices actually move.

The Pricing Question: It Depends on Your Market

Whether developers absorb, pass along, or distribute these expenses remains unresolved. Recent investigations reveal conflicting patterns across different geographies and demand circumstances.

Brookings Institution research from October indicates that rising material expenses may constrain overall construction volume, as companies postpone developments or reduce scope. This production slowdown generates potential upward pressure on values across time, particularly in jurisdictions already battling inventory constraints.

Yet alternative evidence suggests more complex reactions. During earnings discussions, D.R. Horton—America’s leading residential builder—disclosed that affordability limitations have prompted the organization to “boost incentive packages to encourage customer acquisition,” rather than simply marking up asking prices. This approach means certain regions may observe expanded mortgage rate reductions, enhanced seller financing, or upgraded feature packages instead of immediate sticker-price escalation.

Market strength also determines outcomes. Where demand remains robust, elevated building costs frequently do translate to elevated asking prices. Real estate analysts point out that historically, tariff-driven material cost spikes typically precede “price movement within one to three months, followed by demand contraction and slowed construction activity within half a year.”

The Bottom Line: Varied Regional Outcomes

The connection between construction expenses and final home prices isn’t straightforward. Different markets will respond differently. Some regions will likely introduce additional buyer incentives or extend construction timelines rather than raising prices. Others—particularly those with sustained demand—may indeed see direct price increases. The outcomes depend heavily on local competitive conditions, inventory levels, and whether buyers continue viewing homes as financially achievable purchases.