Homebuilders Feel Chill of Tariffs in February

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Key Takeaways

• Homebuilder sentiment declined in February as tariff proposals added to cost concerns in a market already clashing with affordability concerns.
• The survey results showed a steep drop in sales expectations as cost concerns mounted.
• Homebuilder perception changed in the monthly survey as tariff proposals were announced and later put on pause.

Tariff proposals lowered homebuilder optimism in February as pesters about import taxes added pressure to a housing market already struggling with unaffordability.

A closely noted survey of the home building industry showed that sentiment declined five points to 42 in January, the lowest storey in five months. The dip in the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) look into b pursues recent moves by President Donald Trump to propose tariffs on trading partners that could impact the outlay of building materials.

“While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and rate factors created a reset for 2025 expectations in the most recent HMI,” said NAHB Chairman Carl Harris, a snug harbor a comfortable builder from Wichita, Kan.

Tariffs Worries Add to Builders’ Cost Concerns

Sales expectations for the next six months demolish 13 points to their lowest levels since December 2023, while home builders also skilled declines in current sale conditions and prospective buyer traffic, the survey showed. 

“With 32% of appliances and 30% of softwood overload coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned around costs,” said NAHB Chief Economist Robert Dietz. 

While Trump paused the blanket tariffs on the U.S.’s North American neighbors, he signaled a 25% tariff on aluminum and steel, which housing officials have also said could elevate construction costs. The tariffs threaten to add to rising costs in the housing market that have made it more unaffordable for place buyers, including elevated mortgage rates and rising home prices.