Home builders throughout the U.S. have seen stratospheric price increases on steel, aluminum, lumber and other core housing materials this summer due to tariffs imposed by the Trump administration, and experts say the industry is bracing for continued pain, as the president appears likely to move forward with a proposed tax on at least $200 billion worth of goods imported from China.
The tariffs put in place this spring on materials like steel and aluminum—the result of President Donald Trump’s hardline stance on international trade—have already added roughly $9,000 to the build cost of a new home, based on an average U.S. home price of $285,000, said Jerry Howard, CEO of the National Association of Home Builders. The Washington, D.C.-based organization represents more than 140,000 homebuilders and other industry workers.
While the luxury housing sector is certainly not excluded from that impact, it has felt the pain somewhat less than the general housing market, experts said, since materials like nails and concrete are a smaller percentage of the overall cost of a luxury project.
“People who are at that end of the market and are buying homes in that price point, they obviously negotiate and get the best pricing they can, but it’s really about what they want and their willingness to pay, and so the market doesn’t get as affected by it,” Mr. Howard said.
Indeed, wealthy buyers’ demand for luxury housing in the U.S. remains strong, despite a slowdown forecast in the broader housing market. In California, demand is especially robust from international buyers looking to diversify their assets and newly minted millionaires working in the tech industry. According to Dan Dunmoyer, president and CEO of the California Building Industry Association, the tariffs have added roughly $10,000 to the cost of each steel and lumber required to build an average California home, which he defined as having four bedrooms and two bathrooms.
While the taxes on imported steel and lumber combined may add up to $20,000, bumping the cost of building an average home by 5% or 6%, Mr. Dunmoyer said, it increases a typical luxury project in California by just 1% or 2%.
“The impact has been minimal” on the luxury market, he said. “If you can write a check for $3.8 million, you can write a check for $3.85 million easily.”
Impact on design
Where the tariffs have hit home in the luxury market is in design details, particularly in multi-family dwellings. Since the Trump administration imposed 25% tariffs on steel and 10% tariffs on aluminum from Europe, Canada and Mexico in June, developers’ willingness to include lavish details, like exterior metal siding, has appeared to wane, said Peggy Marker, president of Marker Construction Group in Fort Lauderdale,…