Builders across the U.S. are stockpiling lumber, windows, and other essential materials to avoid potential price increases triggered by tariffs on imports from Canada, Mexico, and China. This strategy aims to minimize future costs but presents financial risks if demand for new construction declines.
Idaho-based contractor Steve Martinez expanded his inventory by nearly one-third, spending hundreds of thousands of dollars out of pocket after lenders refused to finance the purchases. Martinez is now renting additional storage space to house these materials, which are often imported from tariff-affected countries, reports the Wall Street Journal.
Wood products are a key concern for builders facing tariff risks. More than 70% of imported softwood lumber used in residential construction comes from Canada, while nearly one-third of imported gypsum, essential for drywall, is sourced from Mexico, according to the National Association of Home Builders (NAHB). If tariffs remain in place, these material costs could significantly rise. The NAHB estimates the cost of building a single-family home could increase by $7,500 to $10,000 as a result.
To mitigate these costs, some builders are seeking alternatives. Cleveland-based developer Andrew Gotlieb is switching from Canadian-grown Douglas fir to Southern Pine, a more affordable domestic option. Southern Pine offers a cost-effective solution but may require additional treatment or modifications for structural use.
In addition to adapting materials, builders are designing smaller homes to reduce construction costs. According to the WSJ, Florida-based developer René Bello is shifting to modular construction methods to improve efficiency and control expenses.
Despite these efforts, uncertainty over tariff policies continues to frustrate builders. President Trump's recent pause on 25% tariffs for imports from Mexico and Canada provided brief relief, yet concerns remain about future price hikes. Builders are also facing challenges in securing financing and managing project budgets.
With home prices already exceeding $500,000 on average in January, developers warn that prolonged tariff policies could push costs higher, further straining affordability for potential buyers.
