Housing Pricing Might Be on the Rise- And Here’s Why

Let’s Talk About It…

If you’ve been considering buying a new construction home, now might be the time to take action. With the potential for rising tariffs on the horizon, housing materials essential to home construction—like lumber, gypsum, steel, and appliances—are expected to see significant cost increases. 

And when material costs go up, so do home prices. Vendors are already working within strict margins, so these cost changes typically transfer over to the consumer. To help you picture what this could mean, I'll give you an example:

If lumber from Canada increases 25% due to tariffs, think what that could mean for the overall build cost of a home. This would impact framing, cabinets, vanities, and so much more!

What’s Happening With Tariffs- And Why It Matters To You

Experts are predicting that new tariffs could add an estimated $3 to $4 billion in construction costs across the U.S. These costs inevitably get passed down to buyers, making homes more expensive to build and, ultimately, more expensive to purchase.

Here’s why this matters to future homeowners:

• Lumber: The U.S. imports about 70% of its lumber from Canada. With existing tariffs already at 14.5%, potential policy changes could push that rate over 39%. That means the cost of building materials could skyrocket.

• Gypsum Products: About 71% of U.S. gypsum imports (used for drywall and other essentials) come from Mexico. Additional tariffs applied to these material costs will drive up pricing even more.

• Steel and Appliances: Many of these materials come from China, and additional tariffs could raise costs by another 10%.

All of these rising material costs mean one thing: new construction homes will likely become significantly more expensive to build—and to buy. AND when prices start to go up, sold homes become new comparables, which then drives up future home prices further down the horizon. It's a lego effect that just keeps going.

Interest Rates May Rise Again

Now, I know this isn't what you want to hear, but I'm here to give you the facts. While rising tariffs are a bummer, there's more. Many homebuyers had hoped for interest rates to drop this year, and original predictions were in our favor. Unfortunately, inflation concerns linked to these rising tariffs could actually push rates even higher.

What does this mean for you as a potential buyer?

• Higher Mortgage Rates: An increase in interest rates will raise the overall cost of borrowing, meaning your monthly mortgage payment could be significantly higher if you wait.

• More Expensive Homes: As construction costs rise, builders will increase home prices to offset their expenses, making that dream home more expensive down the line.

In short, waiting to purchase a new construction home could cost you in more ways than one—not just in the sticker price of your future home but also in how much you’ll pay in interest over the life of your mortgage, aka your borrowing rate.

Why Buying Now Could Save You Thousands

If purchasing a new build is on your radar, acting sooner rather than later could save you thousands of dollars. Here’s how:

• Lock in Current Home Prices: Buying now helps you avoid higher construction costs as material prices increase down the road.

• Secure Lower Interest Rates: Even a small increase in interest rates can add tens of thousands of dollars to the overall cost of your mortgage.

• Avoid Inflation-Driven Price Surges: Rising inflation could increase not just home prices but also the cost of living overall, making now a more affordable time to purchase.

Take Control of Your Home Buying Journey

The bottom line? The combination of rising tariffs and potential interest rate hikes means waiting could be costly. If you’ve been thinking about buying a new construction home, now’s the time to act.

Not sure where to start? Let’s chat about your options before these changes start making an even bigger impact on your financial future. Reach out today to schedule a consultation and learn how buying sooner could potentially save you thousands.

P.S. If you're thinking about renovating, this goes for you, too. Start booking out contractors and laying the groundwork for any renovation projects you want to tackle this year. By being proactive, it could help save you. 

Jen

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