Widening the Gap

June 27, 2025: A recent survey by Wells Fargo and the National Association of Home Builders (NAHB) reveals that confidence among U.S. home builders has dropped to its lowest point since 2022. All three key measures in the survey—prospective buyers, expected sales, and current sales—have declined, with current sales hitting their lowest level since 2012.

The survey also predicts a drop in single-family housing starts this year. So, why are home builders feeling so pessimistic? They point to tariffs as the main culprit.

The NAHB reports that tariffs will add about $11,000 to the construction cost of each home. This increase stems from the fact that many essential building materials, such as lumber, steel, and aluminum, are imported. For instance, Canada provides roughly 30% of the softwood lumber used in the U.S. Additionally, about a quarter of all steel in America is imported, mostly from Mexico and Canada. Simply put, home builders are hesitant to build on speculation because tariffs have made construction significantly more expensive. Last month, total housing construction in the U.S. dropped 13% year over year. Housing permits have declined for four straight months, and housing starts are down 10% year over year.

All of this is happening against the backdrop of an already unaffordable housing market. The median home price now stands near $420,000—a record high. Nearly 75% of Americans cannot afford to buy a home. Generally, those who can afford to own a home are also able to afford a second one. This highlights a deeper national issue: growing wealth inequality between younger and older individuals, a divide that tariffs are only making worse.

In summary, tariffs are not just driving up construction costs—they are deepening the housing crisis and widening the gap between those who have the opportunity to own their home and those who do not.