Housing
starts
came
in
at
an
annual
rate
of
1,501,000.
While
that’s
11.2%
higher
than
January’s
dismal
reading,
it’s
down
2.9%
year
over
year.

The
data
suggests
that
Trump’s
tariff
threats
—
which
seemingly
change
trajectory
on
a
daily
basis
—
are
giving
homebuilders
pause
when
it
comes
to
breaking
ground
on
new
homes.

“The
new
home
sector
has
been
a
bright
spot
in
an
otherwise
very
tight
housing
market,”
said
Bright
MLS
Chief
Economist
Lisa
Sturtevant
in
a
statement.
“The
situation
is
changing
for

homebuilders.
Although
weather
may
have
hindered
completions,
growing
concerns
over
tariffs
are
starting
to
have
an
impact
on
new
starts
and
permitting
activity,”

The
data
for
housing
completions
could
present
challenges
for
the
spring
housing
market.
February’s
annual
rate
of
1,592,000
represents
a
6.2%
decline
compared
to
a
year
ago
and
a
4%
month-over-month
drop.
A
bright
spot
is
that
single-family
completions
rose
by
7.1%
compared
to
January.

Regionally,
the
numbers
are
quite
varied,
with
starts
in
the
Northeast
(20.2%),
Midwest
(-44.4%),
South
(-5.6%)
and
West
(26.2%)
showing
huge
year-over-year
variations.
Permits
are
similar
if
less
dramatic,
as
the
Midwest
(3%)
and
South
(1.5%)
registered
marginal
growth
while
the
Northeast
(-45.8%)
and
West
(-8.8%)
dropped
substantially.

The
combination
of
the
sluggish
housing
market
and
uncertain
federal
policy
is
wearing
on
homebuilders.
The

National
Association
of
Home
Builders
(NAHB)/Wells
Fargo
Housing
Market
Index
(HMI)
for
March

shows
builder
confidence
at
39,
a
three-point
drop
from

February.

Trump’s
trade
war
is
a
prime
reason.
He’s
implemented
a
25%
tariff
on

all
steel
and
aluminum
imports,
with
a
number
scheduled
to
take
effect
on
April
2.

After
a
one-month
pause,
25%
tariffs
on

Mexican
and

Canadian
goods
that
aren’t
USMCA-compliant
will
start
that
day.
So
will
a

global
“reciprocal”
tariff
where
the
U.S.
would
implement
the
same
tariff
rate
on
goods
that
other
countries
have
on
the
U.S.,
a
move
that
potentially
could
upend
the
entire
global
economy.

Lumber
has
also
been
a
target.
He’s
threatened
to
add
a “reciprocal”
tariff
on
Canadian
lumber that
would
match
the
tariff
Canada
has
on
American
lumber.
However,
Canada
does
not
have
a
tariff
on
American
lumber,
so
a
reciprocal
tariff
would
remove
the
existing
14.5%
tariff
the
U.S.
already
has
on
Canadian
lumber.

The

back-and-forth
on
tariffs
is
in
itself
impacting
prices.
The
NAHB
says
they’ve
gotten
anecdotal
reports
that
some
builders
are
pricing
in
an
extra
$7,500
to
$10,000
in
construction
costs
just
to
be
safe.

“There
are
reasons
for
cautious
optimism,”
said

First
American
Deputy
Chief
Economist
Odeta
Kushi.
“Builders’
ability
to
offer
incentives
and
the
potential
for
less
restrictive
monetary
policy
in
the
second
half
of
2025
could
be
tailwinds.
New
homes
offer
several
advantages
over
existing
homes.
The
price
premium
between
new
and
existing
homes
has
narrowed,
making
new
homes
more
accessible.

“Additionally,
in
this
‘higher-for-longer’
rate
environment,
builders
can
offer
mortgage
rate
buydowns
to
make
monthly
payments
more
manageable
and
provide
upgrades
on
interior
quality
features.
Builders
will
likely
use
rate
buydowns
as
a
key
strategy
again
in
2025.”