Housing Industry Braces For More Tariffs Amid Affordability Crisis

By Phil Crone
Executive Officer
Dallas Builders Association

In the midst of a nationwide, 10-year low in affordability, the housing industry is bracing for additional tariffs. From tile to countertops, laminates, lighting, and furnishing, about 450 products commonly found in new homes and remodeling projects are seeing tariffs rise from 10 percent to 25 percent due to the escalating trade war between the United States and China.

According to the National Association of Home Builders (NAHB), homeowners and homebuilders nationwide will be paying an additional $2.5 billion. Existing tariffs on Chinese imports and Chinese retaliatory tariffs already reduce U.S. Gross Domestic Product by 0.15 of a point. These additional tariffs will lower GDP by another half a point. While painful, they should not, in and of themselves, induce a recession.

Closer to home, the Dallas Builders Association members I have spoken to have not seen any increases yet, but they know they are coming. Builders are weary because they recently saw tariffs on Canadian lumber add about $6,000, on average, to the price of a new home from mid-2017 to about June of last year.

The price increases were way higher than the tariffs themselves, which led NAHB to suspect collusion. Tellingly, lumber prices sunk immediately after these suspicions were conveyed to the Commerce Department.

This latest round of tariffs may not hit home until later on in the summer. They attached to products that began shipping this month so it will take a few weeks for them to find their way to store shelves.  

I fear that, as we saw with lumber, some manufacturers won’t let a good crisis go to waste and will use this as an occasion to take profits. Either way, this does nothing but exacerbate the affordability crisis.

Whether they come from the local, state or national level, costly regulations continue to be a top concern for the housing industry as they severely encumber our ability to provide access to great communities, schools and the wealth-creating opportunities of homeownership.    

Phil Crone is the executive officer of the Dallas Builders Association, the trade association and network of Dallas builders. Find out more about the DBA at dallasbuilders.com.