How recent U.S. policy changes will impact the housing market

 ​Recent U.S. policy changes are influencing the housing market through various channels, including tariffs, immigration policies, and fiscal measures.​

Tariffs and Construction Costs

The implementation of tariffs on imported materials such as steel, aluminum, and lumber has led to increased construction costs. These tariffs have added approximately $9,200 to the cost of building a new home, according to recent reports. This escalation in expenses poses challenges for homebuilders and may contribute to higher home prices for consumers. ​

Immigration Policies and Labor Shortages

Stricter immigration policies have resulted in labor shortages within the construction industry, which relies heavily on foreign-born workers. Reduced immigration exacerbates these shortages, potentially slowing down construction projects and limiting the supply of new housing. This dynamic can lead to increased housing prices due to supply constraints. ​

Fiscal Policies and Housing Demand

Fiscal measures, such as tax reforms and deregulation, have the potential to boost housing demand over the long term by enhancing economic growth. However, the benefits may be offset by other factors, including tariffs and immigration restrictions, which can increase costs and limit labor availability. ​

Market Outlook

Despite these challenges, there has been a recent rebound in housing starts, with single-family homebuilding increasing by 11.4% in February 2025. However, the market continues to face headwinds from elevated construction costs and labor shortages, which could temper future growth. ​

In summary, while certain policy changes aim to stimulate economic growth and, by extension, housing demand, the concurrent rise in construction costs and labor shortages presents significant challenges to the housing market's stability and affordability.​