Taken
together,
the
report
shows
that

homebuilders
are
pulling
back
on
construction
as
high

tariffs
on
China
are
reducing
profit
margins
and
giving
prospective
homebuyers
pause.

“Escalating
policy
uncertainty
is
weighing
on
builder
confidence,
just
as
it
is
for
potential
home
buyers,”


Zillow
senior
economist

Orphe
Divounguy
said
in
a
statement.
“Builders
have
slowed
the
pace
of
new
construction.
Increasing
competition
among
sellers,
and
higher
costs
for
land,
labor
and
building
materials
are
squeezing
profit
margins
and
causing
many
builders
to
move
to
the
sidelines.”

The
situation
has
weighed
on
builders.
The


National
Association
of
Home
Builders
(NAHB)/Wells
Fargo
Housing
Market
Index
for
April
landed
at
a
reading
of
40.
While
that’s
an
increase
of
1
point
from

March,
the
uptick
followed
an
8-point
drop
from
January
through
March.

Looking
ahead,
it
appears
that
fewer
homes
will
come
online
in
the
coming
months.
Single-family
homes
under
construction
are
down
8.7%
compared
to
the
same
time
last
year,
although
the
number
of
single-family
completions
is
up
9.6%.

Regionally,
there
aren’t
too
many
bright
spots.
In
the
Northeast,
single-family
permits
rose
by
25%
year
over
year.
But
they
were
down
annually
in
the
Midwest
(-2.3%),
South
(-0.7%)
and
West
(-6%).

Single-family
starts
are
also
down
year
over
year
in
the
Northeast
(-1.5%),
Midwest
(-12.6%)
and
South
(-14.8%),
although
they’re
up
by
3.6%
in
the
West.

President
Donald
Trump’s
aggressive
tariffs
on

China
are

brutal
for
homebuilders.
According
to
NAHB,
27%
of
building
materials
used
in
home
construction
come
from
China.
And
according
to
the

Peterson
Institute
for
International
Economics,
the
current
effective
tariff
rate
on
China
is
an
astronomical
147.6%.

NAHB
has
previously
asked
for
a

tariff
exemption
on
construction
imports
but
has
yet
to
receive
one.
Instead,
Trump
has
maintained
a
25%
levy
on
all

steel
and
aluminum
imports,
and
the
tit-for-tat
tariff
war
with
China
seems
to
only
be
escalating.

“Residential
building
material
costs
are
still
more
than
40%
higher
than
pre-pandemic
levels,
making
construction
more
expensive,”
Odeta
Kushi,


First
American‘s
deputy
chief
economist,
said
in
a
statement.

“Recent
tariff
actions
could
push
costs
even
higher,
with
builders
estimating
an
additional
$10,900
per
home.
If
these
tariffs
persist,
builders
will
have
no
choice
but
to
pass
on
the
costs
to
consumers,
who
are
already
struggling
with
housing

affordability.”