How Trump's Policies Could Impact New Home Buyers: Act Now Before Prices Surge

The Perfect Storm: Tariffs and Immigration Policies Set to Transform Housing Market

If you've been contemplating purchasing a newly constructed home, industry experts suggest acting sooner rather than later. The housing market stands at a critical juncture as the Trump administration's policies on tariffs and immigration threaten to significantly impact both construction costs and timelines.

While President Trump has publicly stated his intention to make housing more affordable, the practical effects of his proposed policies could create the opposite outcome. According to CoreLogic analysis, tariffs alone could potentially increase new home prices by as much as $22,000—a substantial hurdle for many prospective buyers in an already challenging market.

The Double Impact: Rising Material Costs and Labor Shortages

The housing construction industry faces pressure from two distinct but interconnected challenges: increasing material costs due to potential tariffs and a worsening labor shortage tied to immigration enforcement.

Although tariffs on Canadian and Mexican imports are currently paused, the uncertainty has already begun affecting the market. The National Association of Home Builders (NAHB) has launched an aggressive lobbying campaign seeking exemptions for construction materials if tariffs are reinstated.

"Our lobby team has been working tirelessly, meeting with congressional representatives to communicate our concerns," explains Karl Eckhart of NAHB. "These Canadian and Mexican tariffs will directly and painfully impact house construction costs."

The potential price increases are significant. NAHB's chief economist Rob Dietz cites member estimates suggesting home prices could rise by up to $10,000, while John Burns Research and Consulting projects a more dramatic 10% increase to median-priced models if tariffs are fully implemented.

Why Construction Depends on International Trade

Despite home building being fundamentally a domestic industry, it relies heavily on international supply chains:

• Approximately 70% of lumber used in typical American homes comes from Canada

• Mexico serves as the primary supplier of gypsum, essential for drywall production

• Many household appliances installed in new homes are manufactured internationally

In an open letter to President Trump, Carl Harris, NAHB's immediate past chairman, emphasized this dependency: "While home building is inherently domestic, builders rely on components produced abroad. Imposing additional tariffs on these imports will lead to higher material costs, which will ultimately be passed on to home buyers."

The mathematics of affordability are stark—NAHB estimates that each $1,000 price increase for a median-priced new home excludes nearly 115,600 households from the market. Some forward-thinking builders have already begun adjusting their prices in anticipation of potential tariff implementations.

The Workforce Crisis: Immigration Policies and Construction Labor

The construction industry faces an equally challenging situation regarding its workforce. Currently, immigrants constitute approximately 23% of construction workers nationwide, with an estimated half being undocumented, according to the Urban Institute.

The administration's enhanced deportation efforts could exacerbate an already critical labor shortage. The industry currently faces a deficit of approximately 250,000 workers, and any large-scale deportation would further strain this situation.

The Center for Migration Studies estimates that 54% of foreign-born construction workers are undocumented. Consequently, deportations could potentially remove about 1.7 million workers from the construction industry nationwide. In Texas alone, where undocumented workers represent 23% of the construction workforce, the American Immigration Council warns that the state could lose up to 337,000 workers.

Beyond direct deportations, the Urban Institute notes another concerning trend: "In a climate of heightened enforcement, workers who were born in the U.S., are naturalized U.S. citizens, or are green card holders may also fear racial profiling and enforcement risks for themselves and family members." This climate of fear can lead to increased absenteeism even among legal workers.

Longer Wait Times and Changing Incentives

The typical construction timeline for a new home—currently averaging about 10 months from contract signing to completion—will likely extend significantly if workforce shortages intensify. Industry analysts predict delays could stretch from weeks to additional months.

Meanwhile, buyer incentives appear to be gradually diminishing. While 59% of builders still offer various incentives according to NAHB's latest survey, marketing company Zonda notes a slight decline in these offerings. Approximately 73% of builders offer incentives on "quick move-in" properties, but only 56% extend these perks to homes yet to be constructed.

This combination of factors—potentially higher prices, longer build times, and fewer incentives—creates a compelling case for prospective buyers to act quickly.

Market Insights: What Homebuyers Need to Know

How much could tariffs increase new home prices?

Estimates vary, but CoreLogic suggests up to $22,000, NAHB projects around $10,000, and John Burns Research anticipates a 10% increase to median-priced models. The actual impact depends on which tariffs are implemented and their rates.

What options do builders have to manage increased costs?

Builders can absorb some costs temporarily, but ultimately must either pass increases to buyers, reduce house sizes, or eliminate premium features. Most will likely use a combination of these approaches.

How severe is the current housing shortage?

The housing shortage is estimated at 3.7 million units nationwide. Between 2010 and 2023, housing units grew by 10% while households increased by 13%, contributing to record-high prices and rents.

Will construction delays affect all regions equally?

No. Areas with higher concentrations of immigrant construction workers, particularly states like Texas, California, and Florida, may experience more significant delays if immigration enforcement intensifies.

Are buyer incentives disappearing completely?

Not yet, but the trend suggests a gradual reduction. While most builders still offer some incentives, especially on completed "move-in ready" homes, fewer are extending these offers to custom builds or homes yet to be constructed.

What's the best strategy for potential new home buyers?

For those financially prepared to purchase, acting sooner rather than later could provide significant savings. Consider locking in current prices through builder contracts that protect against future increases.