Tariffs Are Raising Construction Costs
At LBC Mortgage, we understand how these changes affect buyers and builders alike—and we’re here to help you navigate them.
New tariffs introduced in 2025 have sharply increased the cost of key building materials. Lumber from Canada now faces a combined tariff of up to 39.5%, while steel and aluminum imports are subject to a 25% levy. Chinese goods, including appliances and fixtures, carry a staggering 145% tariff. These increases have added an estimated $10,900 to the cost of building a new home, according to the National Association of Home Builders.
In California, where many materials are imported, these tariffs are particularly burdensome. Builders are facing higher costs for essential items like gypsum, copper, and plumbing components, leading to increased home prices and construction delays.
Key Construction Materials Affected
- Lumber: Canadian lumber now has a tariff of up to 39.5%.
- Steel and Aluminum: Imports from various countries face a 25% tariff.
- Chinese Goods: Items like appliances, fixtures, and plumbing have tariffs as high as 145%.
- Gypsum and Copper: Essential for walls, roofing, and wiring, now cost significantly more.
Builders Delay Projects Amid Uncertainty
The rising costs and unpredictability of material prices have caused many California builders to reconsider or delay projects. In Southern California, developers have postponed significant projects, including a $150 million mixed-use development in Los Angeles County and a $55 million multifamily project in Orange County.
Project Delays Impact Housing Supply
When builders delay or cancel projects, it affects the supply of new homes in California. With fewer new homes entering the market, buyers face increased competition for existing properties, pushing prices higher.
Why Developers Are Hesitant
- Uncertain Costs: Fluctuating material prices make budgeting difficult.
- Reduced Profit Margins: Higher expenses impact developer profits.
- Regulatory Challenges: California’s strict building codes add further costs.
Tariffs Compound California’s Housing Crisis
California already faces a severe housing shortage, with demand far outpacing supply. The added burden of tariffs intensifies this crisis by increasing construction costs and discouraging new developments. As a result, home prices continue to rise, making affordability a growing concern for many residents.
Impacts on Homebuyers
- Higher Prices: The imposition of tariffs on construction materials directly affects homebuyers by driving up the cost of new homes. As builders pay more for essential materials, these increased expenses are passed on to buyers in the form of higher home prices. This means that prospective buyers may find it more challenging to afford a home within their budget.
- Limited Supply: Tariffs not only increase costs but also cause significant delays in construction projects. Builders may struggle to source materials or face higher costs that make them rethink the timeline of their projects. As a result, the supply of newly constructed homes becomes limited, making it harder for buyers to find suitable properties.
- Increased Competition: With a reduced supply of available homes due to construction delays, buyers are forced to compete for a smaller number of properties on the market. This heightened competition can lead to bidding wars, further pushing up home prices and making it more difficult for buyers to secure a home.
Impacts on Builders
- Cost Increases: Builders are directly affected by the rising costs of essential materials due to tariffs. Items such as steel, lumber, and other critical building materials become more expensive, significantly increasing the overall cost of construction projects. This forces builders to either absorb the additional expenses or pass them on to buyers.
- Project Delays: Rising material costs may prompt developers to reconsider the feasibility of certain projects. Some may choose to delay or even cancel planned developments to avoid financial losses. These delays can disrupt construction timelines and impact the availability of new homes in the market.
- Financial Pressure: The combination of higher material costs and delayed projects puts significant financial pressure on builders and developers. With tighter profit margins, some may struggle to maintain financial stability, leading to a reduced capacity to undertake new projects or complete ongoing ones.
Broader Economic Effects
The impact of tariffs goes beyond housing. Infrastructure projects, including roads, bridges, and public facilities, are also affected by rising material costs. Local governments may delay or downscale public works, affecting overall economic growth.
LBC Mortgage Helps You Navigate Rising Costs
At LBC Mortgage, we specialize in guiding clients through complex market conditions. Our expertise in California’s housing market allows us to offer tailored mortgage solutions that account for the current challenges posed by tariffs.
We work closely with builders and buyers to identify financing options that mitigate the impact of increased construction costs. Whether you’re purchasing a new home or investing in development, our team provides the insights and support needed to make informed decisions.
Why Choose LBC Mortgage?
- Local Expertise: We understand California’s unique market challenges.
- Custom Solutions: Our team tailors mortgage options to fit your needs.
- Trusted Guidance: Our experience helps clients navigate uncertain conditions.
- Fast Approvals: We streamline the application process, saving you time.
How We Support Buyers and Builders
- Flexible Loan Options: From conventional mortgages to construction loans.
- Competitive Rates: We help you secure the best possible terms.
- Dedicated Support: Our team is available to answer your questions.
Contact Us Today
The implementation of U.S. tariffs on imported construction materials has significantly influenced California’s housing market, leading to higher home prices and stalled developments. These challenges underscore the importance of strategic financial planning and expert guidance.
LBC Mortgage stands ready to assist you in navigating these complexities, offering customized mortgage solutions to meet your needs. Contact us today to learn how we can help you succeed in this evolving market.
