Trump paused rates, but housing builders still see a long -term risk
Rates on Canada and Mexico
Last weekend Trump had Trump created the housing builders and related markets by implementing a rate of 25% on both Canadian and Mexican goods. But the rates were not in place for long. Trump paused the tasks in both countries for one month after extracting small concessions from Canada and Mexico about items with regard to border security and fentanyl trade.
Those breaks are particularly impactful. According to data from John Burns Real Estate Consulting (JBREC), Homebuilders imported 31% of their sawmill products in 2024 and 72.9% of that import came from Canada.
Mexico is similar. The US imports 44% of its most important devices, 43% of its hardware and 20% of its glass. Mexico is an important trading partner with these goods. The country accounts for 33% of the most important input of devices, 23% of the glass and 20% hardware.
Although the monthly break is positive news for builders, it will not be long before prices rise if a long -term agreement does not occur with Canada and Mexico ends on March 1 after the break.
When the Canadian rates came into force, the price of wood was immediately. On 3 February the price of 1,000 board feet $ 591 to $ 626 rose. When the break was announced, the price dropped. This shows that even a short -term rate can have a major impact.
“Based on this historical precedent, it seems that consumer prices react fairly quickly when the rates are introduced,” said Matthrew Saunders, a researcher of the construction products at JBREC. “When a rate was set in the input of the washing machine in 2018, there was an immediate jump in consumer prices. When we go to 2019 when there was a rate for Chinese import of furniture, we also saw a leap. “
A rate for China
This is bad news with regard to the 10% rate that is placed on China, which remains in place. The input of the building that is most affected by the rate are small devices. The US imports 73% of its small devices and China offers 67% of them.
But just like Mexico, China exports a number of building materials to the American sanitary luminaires and Trim from China accounts for 55%of the input, in addition to large glass shares (33%), large devices (30%) and hardware (29%(29 % (29%).
Builders have stored materials for Trump’s second term
Trump’s Pro-Tariff position has been telegraphing for 10 years, so builders have had sufficient opportunity to prepare. Builders bought wood in advance to retain lower prices if Canadian rates remain in place for a long period.
This has resulted in raised wood supply as builders the spring season. A silver lining to the stagnant housing market is that a low demand – caused by high prices and stubborn mortgage interest – means that the existing inventory will take longer than usual.
“The current inventory must be clear and I am not sure if people need so much in the short term,” says Lumber Trader Stinson Dean. “But a medium-term reset of some ‘cheap’ wood costs will probably be set $ 100 higher than pre-Tariff. We are for many more headlines around these rates. There is a very good chance that we will trade on either side of $ 600. “
Builders have also diversified their supply lines, so they are not so dependent on one country or source, which had extra interest during the pandemic when foreign delivery lines were closed, especially in China.
That effort has led to Vietnam becoming an increasingly important trading partner. In the 1980s, Vietnam opened his economy to lead foreign investments, which ushered in a rather unthinkable level of wealth to the country and forged an unlikely alliance with the United States. The US even provided military support to Vietnam in the hope of dealing with China.
This appears in JBREC data. In 2010, Vietnam exported $ 11.3 million to small devices, the construction input that the US most trusts on China. That number has since been bleached to $ 1.1 billion. In 2024, China exported $ 10.5 billion in small devices to the US, although that number has largely stagnated since 2018.
Vietnam also exports $ 549 million to large devices, $ 167 million in glass and $ 167 million in sanitary products. While Vietnam still makes up for a small percentage of the import of the American building, the dollars were hardly in 2015 for those goods.
The threat of mass expansions
The impact of mass deportations on building work is impossible to quantify because it is not known whether a certain deported immigrants works in construction work, nor is it clear how many people without paper are actually deported.
Axios reported Thursday that Immigration and customs enforcement (ICE) used the “catch” catch and release “program to free some custody, because the US does not have the facilities to retain the number of arrests that Trump has requested.
The administration is looking for other detention methods. It flies migrants to the prison in Guantanamo Bay in Cuba who is used to accommodate people suspected of ties with al-Qaeda. Trump has also shown interest in sending migrants – and American citizens – to a prison in El Salvador, offered by President Nayib Bukele of the country.
But even if deportations accelerate, it is possible that the impact on housing builders would be limited. Videos circulated Twitter Showing half -built subdivisions in Fort Worth that seem to be leaving, with the implication that the workers hide. However, these are not -rejected videos and even possible.
Trump seems receptive to requests from home builders
Although it will remain uncertain for the near future, NAHB CEO Tobin believes that the White House has been receptive to the communication of the trade group, including a request for a tariff exemption on building materials.
He is also optimistic that Trump’s memo could bring legal lighting for housing price lighting. A NAHB study in 2021 estimated that 25% of the costs of building a house is the result of regulations at different levels of the government, a number of Trump cited in the memo.
Although the federal government is quite limited about what it can do to help reduce home prices, Tobin points to regulations that have been implemented by former President Joe Biden, which he thinks is unnecessary or excessive.
Excessive regulations
One is the 2021 International Energy Conservation Code, which requires that FHA -Leners buy houses that meet the code. Tobin says that this increases the costs of housing for a class of borrower who cannot afford it.
Tobin says that he supports a lot of efforts to keep water clean, but also believes that a decision by the Supreme Court on the Clean Water Act, adds efforts and costs to building houses, catching house builders in a ‘regulatory swamp’.
But despite all the headwind, housing builders remain convinced that it can navigate because of the uncertainty to achieve positive results for both builders and home buyers.
“We have to balance rules with the costs of housing, because it is equally important to put shelter over your head every night,” Tobin said. ‘[Tariffs] Maybe a short -term blip, but we also try to follow a holistic approach. The entire economic and regulatory attitude of this administration will continue to change in the coming months. “
