New houses under construction in Englewood Cliffs, NJ on September 24, 2024.
Adam Jeffery | CNBC
From wood to dry partitions through household appliances, a large part of what is happening in an American house comes from the external American borders.
The cost of these products is about to go up because the administration of President Donald Trump imposes prices on China, Mexico and Canada. The goods from China are now subject to a 20%tax, an increase compared to a previous tax of 10%, and those in Canada and Mexico are faced with a 25%tax. Canadian wood was already subjected to distinct tasks of 14.5%.
The new prices could increase the manufacturer’s costs from $ 7,500 to $ 10,000 per home, said Rob Dietz, chief economist of the National Association of Home Builders, citing the estimates of the manufacturers of American houses. Last year, the NAHB estimated that each $ 1,000 increased from the median price of a new price of houses out of approximately 106,000 potential buyers.
The largest impact on house manufacturers will come from wood cost increases, which should total $ 4,900 per home on average, according to the main American manufacturers, the commercial group representing most house manufacturers listed on the country.
About a third of the woods used in the construction of American houses come from Canada, and national wood producers should increase their prices to match the imported offer.
“Since Trump imposed the prices for the first time on February 1, which were then delayed, we noticed a certain increase in purchase with the prices of the western Spruce-Pine-Fir two by four increasing by 13%,” said Paul Jannke, director at Forest Economic Advisors. “With the taxation of the 25% price on Canadian products shipped to the United States, we expect Canadian producers to stop shipping wood to the United States, dealers, who hesitated to buy given uncertainty around prices, will have to intensify purchases before the next construction season. This will make higher prices.”
Wood -term contracts increased 5% last week and increased regularly on Tuesday.
Trump published a decree on Saturday to increase the production of domestic woods thanks to a rationalization of regulatory and authorization processes. The house construction industry took this as a victory.
“A stable and affordable wood offer is extremely important for our industry to take care of the country’s housing supply,” Ken Gear wrote, CEO of the LBA, in a press release. “The national woods industry cannot meet the current demand, so we applaud President Trump for exploring opportunities to increase interior supply as a long -term solution.”
The NAHB, which represents private and medium -sized private manufacturers, “praised” the move, but said in a press release: “All additional wood prices could further increase the cost of construction and discourage new development, and consumers end up paying the prices in the price of higher houses.”
As for accelerating interior production immediately, it is easier to say than to do. Jannke estimates that it would take up to three years to build several new factories. He explained that there are a limited number of companies that make sawmill machines and even less, perhaps one or two, which can build a mill from top to bottom.
Strong demand during the first years of the COVVI-19 pandemic, when the house manufacturers were gangbusters, wood producers rushed to develop.
“However, so many people wanted to build [or] Develop Mills, that the deadlines for equipment manufacturers have moved two years, “said Jannke.” These factories are in rural areas that tend not to have the skilled workforce necessary to operate a modern sawmill. This added another year before the mill operates at full capacity. “”
The active population, from transport forest operations, is already lean and decreases. The opening of new lands and the deregulation of the industry is one thing, but finding the workers to put us on the market is another.
“In the short term, he will be very volatile from a price point of view,” said Kyle Little, chief of operation at Sherwood Lumber, based in New York. Regarding the increase in production, “it will not be a turn of a switch. You take a 40 -year supply chain and try to change overnight – it’s difficult.”
Home landscape
Beyond the wood, the house construction industry is subject to cost in the sector.
China is the market leader in household appliances. And, the majority of dry partitions, or gypsum, used in commercial and residential construction is imported from other countries. In 2023, the United States imported $ 215 million in gypsum, becoming the largest importer of the product in the world, according to OEC World, a commercial data platform. He mainly comes from Spain, Mexico and Canada.
“The increase in costs due to the prices on imports will leave the manufacturers with few options. They can choose to adopt higher costs to consumers, which will mean higher prices of houses, or try to use less of these materials, which will mean smaller houses,” said Danielle Hale, chief economist of Realtor.com.
Hale noted that if the new construction will see the largest impact, the prices will modify the landscape of the housing market overall, including existing houses.
“We can see the willingness of buyers to pay an increase in existing houses as newly built houses become more expensive, which would also mean the rise in the prices of existing houses. We can also see a lower appetite for major remodeling projects that would be based on these entries affected by prices, added.
Although house construction costs will certainly increase, the Trump administration is praising lower mortgage rates in recent weeks. The average rate over the 30 -year -olds reached its last 7.26% summit on January 13, according to Mortgage News. It is now about 6.64%.
“I think that so far, one of the greatest victories for the American people has since elevated the election day, and since the inauguration, mortgage rates have decreased dramatically,” Treasury Secretary Scott is said in an interview on Fox News on Tuesday.
Bessent noted that the propagation between the treasure at 10 years and the mortgage rates has shrunk, although this propagation was in fact considerably widened since Trump took up his duties.
The prices occur at a time when the American housing market is already under pressure. The contracts signed on existing houses fell to the lowest level ever recorded in January, according to the National Association of Realtors. Sales of newly built houses fell 10% in January, compared to December, according to the American census. And the prices are still stubbornly high, the inventory of houses for sale always low.