Corrections & Clarifications: This article has been revised to specify that the discussed construction products are imports.

For many Americans, purchasing a home is the most significant financial commitment they will ever make, and future prices may increase further if the tariffs proposed by the Trump administration come into effect.

According to an analysis by John Burns Research and Consulting, which specializes in the housing sector, the price of a newly built home could rise by nearly 5% if the tariffs are enacted. This equates to an additional $21,000 on the median-priced new home.

Although the Trump administration has suspended the proposed 25% tariffs on Canada and Mexico for at least a month, a 10% tariff on goods imported from China was implemented on Monday.

Matthew Saunders, senior vice president of building products research at the firm, remarked, “(Tariffs) will come as a shock to affordability if they are enforced.”

Residential construction requires a multitude of materials. For most categories, a significant portion of imported supplies is sourced from the countries facing tariffs this month. Saunders’ analysis shows that nearly 60% of hardware imports are from China, Canada, and Mexico. Additionally, about 75% of imported wood products come from Canada, while the U.S. actually sources more major household appliances from Mexico, in dollar value, than from China.

Although a 5% increase might appear minor, understanding the context is essential. The median price of a new home was $427,000 in December 2024, according to the Census Bureau. This represents a 30% increase over five years, and current mortgage rates are approximately double what they were right before the pandemic.

Saunders further pointed out that tariffs could have additional consequences. Domestic suppliers may raise their prices to match those from countries affected by tariffs simply because they can.

The ongoing trade conflict with Canada could also lead to future lumber supply challenges, according to Stinson Dean, an investor who heads Deacon Lumber.

“The more significant issue is the long-term effects which could make sawmill operations in Canada unprofitable due to increased operational costs in the U.S.,” Dean told YSL News. “Currently, we don’t require excessive lumber given the housing market conditions, but that will eventually shift, and demand for lumber will surge.”

Once consumer interest in new homes increases—likely when mortgage rates significantly drop—the production capacity may not be sufficient, he added.

“The tariff doesn’t even need to be enforced. The mere threat of it has already harmed potential supply increases.”

The rising costs of building materials also worsen existing labor shortages in the construction sector, according to Saunders. Many homebuilders may find it challenging to absorb the added expenses, leading to a point where consumers can no longer afford to purchase homes.

“When considering immigration issues, possible deportations, tariffs, and other factors, it’s all contributing to an already untenable situation,” he explained.

This article has been updated to include the latest information.