U.S. Housing Market 2025: Here’s how the housing market reacts to Donald Trump’s tariffs – impact on buyers and sellers, construction costs, mortgage rates
Analysts said further tariffs will further curb market activity as the U.S. housing market already faces affordability issues.
Stock market reaction triggers alarm
The market responded strongly to news about President Donald Trump’s 25% tariff on Canadian and Mexico imports. Even though Trump delayed applying for some tariffs, uncertainty has really shaken investor confidence.
The S&P 500 fell sharply by 3% and the Nasdaq fell 4%, indicating concerns about the broader economic impact, as stated in the Newsweek report.
Joel Berner, senior economist at Realtor.com, stressed that sudden market volatility may reduce the financial capabilities of potential home buyers.
As cited in a Newsweek report, the decline in stock markets means potential buyers may lose some of the wealth they thought of reducing payments, which could drive more people out of the market. ”
The housing market is under pressure
Mortgage rates in the U.S. housing sector are high, record prices for homes and ongoing inadequate homes available for purchase.
These troubles have put many buyers in a difficult position off the market and forced sellers to lower prices as real estate lasts for a longer period of time.
“The market has been popping up with cooler trends, and with concerns about tariffs and recession, this could attract attention.”
Will tariffs lead to recession?
Although U.S. economic indicators such as U.S. employment are still relatively stable, experts believe Trump’s trade policy may bring the economy closer to a recession.
Inflation has eased slightly, but hiring momentum has slowed down, raising concerns about economic resilience, according to the Bureau of Labor Statistics.
“While today’s employment numbers are held, the ongoing trade war could slam international sales and increase the costs of U.S. businesses, which could impact jobs and wages in a timely manner,” Bernard warned.
Greg McBride, senior analyst at Bankrate, added that while the threat of a recession has grown, the strong foundation of the U.S. economy may provide some buffering.
“Nevertheless, the ongoing threat of tariffs has caused uncertainty, which makes the possibility of frustration even more likely,” he said.
Tariffs that increase construction costs
Real estate industry analysts point out that Donald Trump’s tariffs are likely to increase the cost of home construction.
“About 8% of the materials imported from home construction in the United States are imported, and tariffs will increase the cost of building a regular home as much as $10,000,” added Steve Hanke, a professor of applied economics at Johns Hopkins University.
The National Association of Housing Builders (NAHB) also adds red flags to the increased costs, especially considering that most cork wood (mainly under construction) is imported from Canada.
Impact on both buyers and sellers
The recession, increasing the rise in construction prices due to tariffs, is not good for both buyers and sellers.
McBride noted that while the decline will lower mortgage rates, it will be almost impossible to comfort if job losses and income uncertainty undermine consumer confidence.
Furthermore, while some expect home prices to fall, experts warn against seeing it as positive.
As in a Newsweek report, McBride said: “The drop in home prices could erode millions of homeowners and damage the wealth of the market’s stable.”
FAQ
What are the tariffs on Canada?
The United States also imposed a 25% tariff on various imports from Mexico and Canada, and received certain exemptions, as well as a 20% tariff on Chinese goods.
Is tariffs a tax?
Tariffs are taxation on goods imported or exported from other countries. It is a tool to regulate foreign trade, and usually protects or promotes domestic industries by making foreign products more expensive.
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