A new analysis from CoreLogic on the Trump administration‘s recently announced tariffs and their potential impact on housing suggests that tariffs could push home construction costs up by 4% to 6% over the next 12 months as material costs adjust to the new landscape.
In turn, CoreLogic said that homebuilders could face up to a 10% increase in material prices. And that doesn’t include household fixtures, such as appliances, lighting and cabinetry, which could increase in price by 10% to 20%. CoreLogic also cited potential new tariffs on Chinese steel that could alter project budgets by double-digit percentages.
With the costs of imported goods expected to rise, the pressure on domestic products and production will also rise. Although CoreLogic characterized the country’s supply chain as “stable,” the real estate analytics company warned that a return to the 2021 lumber shortage frenzy could be imminent.
“If builders choose to circumvent the mooted tariffs by sourcing a higher percentage of materials domestically, a rush on U.S. materials could lead to supply chain bottlenecks that could also result in short-term price hikes,” the analysis stated.
The analysis, written by CoreLogic’s data team with insights from Jay Thies and Pete Carroll, noted that the average cost to build a new home in the U.S. is now $422,000. “Adding in potential material cost increases from the tariffs would add between $17,000 and $22,000 to that price tag,” CoreLogic wrote.
In 2024, the median cost for a home in the U.S. rose $19,500. In October 2024, the median home price was $385,000, less than the average cost of a new build. CoreLogic pointed out that either option is increasingly out of reach for many would-be homeowners.
“The U.S. Department of Housing and Urban Development (HUD) defines being cost-burdened as spending over 30% of gross income on housing-related expenses. By this measure, buying a median-priced home would push millions — the median annual wage for U.S. workers in 2023 was $48,060, according to the Bureau of Labor Statistics — into this category,” according to the analysis.
“The economics are now upside down. Even incremental increases in the cost of materials, labor, and equipment make it that much more difficult to build a home profitably. This further disrupts efforts to close the critical gap in U.S. housing supply,” said Carroll, CoreLogic’s executive vice president of public policy and industry relations.
“If we’re going to create and restore homeownership opportunities for families, we need to fill in this single-family starter home segment that’s missing.”
Profit margins are at risk too. The National Association of Home Builders reported that the average profit margin for a homebuilder in 2024 was 11%. CoreLogic said that even a 4% increase in the cost of building a home would slash these current margins and put affordable homebuilding efforts on the back burner.
CoreLogic found that construction production is already slowing as 2024 saw a 5.8% decrease in housing starts compared to 2023, with builders constrained by land availability and affordability. Rising costs will only cause starts and completions to further slow.
Changes in construction material prices have already occurred too. Aluminum conduit saw a 12.5% year-over-year increase in January 2025 — the highest price increase for any material analyzed in the CoreLogic report. Steel deck prices were up 11.2% and concrete block costs increased by 7.2%.
CoreLogic’s report touched on the catastrophic wildfires that took place in Los Angeles last month. Its data showed that 20,000 properties were damaged, 60% of which will be total losses, which will result in droves of claims for restoration and rebuilding.
A surge in demand for domestic materials could result in a 10% to 20% increase in material prices in the short term. For lumber, CoreLogic said that this would be on top of current prices, which are 4% above the long-term average.
CoreLogic uncovered a similar pattern after the fires that scorched Maui, Hawaii, in August 2023, when the company saw a 7% spike in concrete prices.
