Tariffs Hit US Housing Market As Construction Costs Keep Rising
Construction prices have surged for the third straight month in March, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics latest data, reflecting the early impact of sweeping tariffs introduced by the Trump administration against some of the U.S. biggest trade partners.
Residential construction input prices were up 0.5 percent last month from February, while nonresidential construction input prices climbed 0.6 percent compared to the previous month. Overall, both residential and nonresidential construction input prices were 0.8 percent higher than a year earlier.
Why It Matters
The country is currently in the middle of a housing affordability crisis largely due to a historic lack of inventory, exacerbated by years of underbuilding following the Great Recession.
While construction projects picked up across the country over the past year, aiming to add much-needed new inventory to the struggling U.S. housing market, the impact of Donald Trump’s tariffs on the price of key materials used in homebuilding now has the potential to discourage new development.
What To Know
Construction costs have skyrocketed since the outbreak of the COVID-19 pandemic, contributing to the ongoing supply shortage in the country.
According to ABC data, construction input prices have shot up 41.6 percent between February 2020 and March 2025, with the highest increases reported in the cost of copper wire and cable (up 51.6 percent), fabricated structural metal products (up 57.6 percent), steel mill products (up 53.9 percent), and switchgear, switchboards, and industrial controls equipment (up 52.3 percent).
But recent increases tell a slightly different story, adding the burden of additional costs brought about by the Trump administration’s tariffs to already-rising prices across the board.
Construction on a mixed-use apartment complex that will hold more than 700 units of housing and 95,000 square feet of commercial space on August 20, 2024, in Los Angeles, California.
Mario Tama/Getty Images
The largest increases between February and March were reported for natural gas (up 10.4 percent), steel mill products (up 7.1 percent), iron and steel (5.5 percent), and copper wire and cable (5.5 percent).
Between March 2024 and March 2025, the biggest year-over-year price jumps were reported in the cost of natural gas (up 147.6 percent), copper wire and cable (up 13.4 percent), softwood lumber (up 12.6 percent), and construction sand, gravel, and crushed stone (up 8.3 percent).
Newsweek contacted Associated Builders and Contractors for comment by email on Tuesday.
What People Are Saying
ABC Chief Economist Anirban Basu said in a statement: “Construction input prices increased at a rapid pace for the third consecutive month in March and have now risen at a 9.7 percent annualized rate through the first quarter of 2025.
“The emerging effects of tariffs are glaring in the March data release, with iron and steel, steel mill products and copper wire and cable prices all rising more than 5 percent for the month. While contractors remain busy for the time being, according to ABC’s Construction Backlog Indicator, this pace of input price escalation, coupled with rising uncertainty, will cause projects to be delayed and canceled if it persists for any meaningful length of time.”
Ken Simonson, AGC chief economist, told Construction Dive: “Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear valued customer’ letters announcing further increases for many products. Rapid-fire changes in tariffs threaten to drive prices higher for many essential construction goods.”
What’s Next
While Trump promised to make housing more affordable for Americans and increase inventory in the U.S. housing market, experts fear that some of his policies—including tariffs—could bring up prices and discourage homebuilding.
Among widespread uncertainty over how tariffs would impact the price of materials essentials to homebuilding—including softwood lumber and steel, subject to 10 and 25 percent levies when imported to the U.S.—pressure is mounting on both homebuyers and builders.
In March, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index declined to 39 from 42 in February, the lowest level in seven months, suggesting builders’ uncertainty about the future.