Tariffs and More: What Happens Now With the 2025 Housing Market?

There’s some extra tension in the real estate market. Anyone can sense it. Knowing what’s going on underneath it can help those who hope to acquire a deed this year.

Home prices haven’t stopped rising in 2025. Prices could easily go up between 3 and 4 percent more, over the rest of the year. And waiting until later is no guarantee of a better buy.

The wild card? It’s the new administration’s policy moves on the building sector, according to the financial publication Kiplinger.com. The Trump administration has increased the cost of key Canadian and Mexican metals by 25% by way of tariffs. Broader tariffs are slated to go into effect starting this week: April 2.

“Housing Market Faces Headwinds”

What headwinds does Kiplinger show us? Some of them are old news by now. Yes, deed holders who snagged super-low rates from 2020 through early 2022 are still hesitant to sell. And many older adults would prefer to keep their deeds than to leave familiar surroundings. All told, more than a third of current deed holders nationwide have no intention to sell — ever.

All this helps keep the pickings slim, and the prices high. First-time buyers bear the brunt of the pain, to the extent that they aren’t sitting on home equity. They’re looking for smaller homes they can afford. And good luck with that, right? The traditional “starter home” seems to be an endangered species.

On the plus side, many more homes should pop up for sale, Realtor.com predicts, throughout the remainder of the year. This is because so many new builds are under construction. So far, anyway. And in certain areas.

Buyers who obtain their deeds from home construction companies could find builders who offer incentives to home buyers. These range from covering the costs of appraisals to a year-long discounted mortgage rate.

Whether the hopeful buyers can actually find that inventory, of course, is a matter of where they look and where they are able to go. It appears that some building regulations will be stripped down, allowing builders to speculate on land that has not been easily available before.

The Trump administration’s deregulation slant is double-edged. Building too fast or too much could have negative impacts for all deed holders down the road (particularly given climate impacts). At the same time, fewer restrictions mean more real estate developments. But will they be what most people are looking for?

More and More Question Marks Hang Over the Future

Mortgage interest rates are above 6% and set to stay that way. Still, no one can make a sure bet about this market. Too many weighty question marks hang over the nation’s collective future:

• The disruptive effects of deportations on the home building industry — as well as on many current and potential deed holders — could be game-changing. Builders and buyers near the U.S.-Mexico border will be especially vulnerable. But the loss of workers will impact the whole building and renovation sector.

• Thanks to the various real estate websites now including climate data, buyers are becoming more aware of the drawbacks of particular areas. These drawbacks can involve increasing storm severity, fire perils, and hikes in insurance premiums. Some properties have new disclosure standards or new rules. An example is the need for California owners to “harden” their properties against wildfire risks in fire-prone areas.

• We don’t know what the Feds will do about banks’ interest rates at this time. The Federal Reserve is in wait-and-see mode, with so much yet unknown about how tariffs will be implemented and how that will impact inflation. Eventually, mortgage rate trends could shift.

What does it all mean? Home buyers need to focus on due diligence — both to understand the value in a given deed, and to protect it.

Builders See New Home Price Tags Going Up More than $9K

Imagine the cost of building a new home going up by some $7,500 to $10K. That’s the expectation, with tariffs making just about every material more expensive.  

Recent polling from the National Association of Home Builders shows a specific figure. Burdened by tariffs, the cost inflation for material supplies is on the way to slapping $9,200 onto the typical price tag for a newly built home.

Recruiting people for construction teams is now getting harder. With the supply of workers down, it costs more to hire teams for home building jobs. That’s on top of ordinary, run-of-the-mill inflation. Even before the threat of tariffs, builders say, wood products alone have gone up enough in price to increase the cost of producing the typical home by about $14K over the past few years.

This is exactly why the National Association of Home Builders is not a fan of adding new tariffs to the mix.

The head of Related Group, a Florida condo developer, says industry players are already jacking their prices by up to 20% in anticipation. In other words, as CNBC recently reported, contractors are bracing for soaring costs. And they’re self-protectively padding their prices. When builders have to pay more, they usually pass the extra costs along to buyers.

According to the builders’ association:

• Softwood lumber comes mostly from Canada, a target of the Trump administration’s tariff plans. Some companies are less dependent on foreign wood products than others, but Canadian wood has a significant role across the industry.

• Gypsum is mainly a product of Mexico — which, like Canada, faces tariffs.

• Many key metals, as well as systems needed to outfit homes, come from China. Imports from China face particularly high price hikes on account of U.S. tariff rollouts.

Even for the builders that work largely with U.S. products and materials, prices will go up. That’s because of the heightened competition to get the cheaper, domestic resources. Once again, it looks like shortages and stockpiling are beginning to take hold in the home building sector.

The Upshot: A Case for Making Real Estate Moves Sooner Rather Than Later

All told, it certainly looks like things are going to get even harder for the ordinary person hoping to acquire a deed in 2025. This is why housing economist Ken Johnson has told hopeful buyers they might as well get mortgages now “if you see a rate that you are happy with.”

Similarly, current deed holders with pressing reasons to sell might as well make their moves.

Next week, the outlook could look different — but for now, those headwinds are consolidating.