Will New Tariffs Make Homes More Expensive?

By Nick Kellar

Nick Kellar is a dedicated real estate consultant, investor, and community steward serving Baltimore and the surrounding areas.

President Trump’s new tariffs are now in effect, but how does this affect your real estate plans this year? As a real estate expert, I’m here to break down how tariffs and mortgage rates affect you, whether you’re buying or remodeling your home.

These aren’t just abstract economic terms; they’re real costs that can add thousands to your budget. Let’s dive into what’s happening and how you can stay smart in this shifting market.

1. Rising construction costs. If you’re planning a home project like finishing a basement, building an addition, or remodeling your kitchen, tariffs on imported materials will drive up costs.

According to the National Association of Home Builders, 27% of materials used in home construction come from China, and 73% of lumber comes from Canada. When duties on these products go up, the cost of building or remodeling can jump by $9,000 to $13,000.

Those price jumps have a direct effect on your budget. To stay ahead, get detailed quotes from contractors early and lock in material prices when possible to avoid surprises.

2. Understanding mortgage rates. Rates may seem unrelated to tariffs, but they’re actually connected through the bond market, which reacts to global trade. When investors get nervous about the economy, they often move their money into safe options like U.S. Treasury bonds. This drives bond yields down, which can lower mortgage rates—great news for buyers.

However, since mid-April, rates have started to rise again. This is partly because countries like China and Japan hold a lot of U.S. debt. If trade tensions lead them to sell those bonds, yields will go up, and so will mortgage rates.

Right now, the best move is to lock in your rate when it dips and work with a lender who keeps you informed about market changes.

3. Increased cost for buyers. Buying a home is already expensive, and tariffs just add to the costs. The Tax Foundation estimates that tariffs cost the average household over $1,300 yearly on everyday items. When you combine that with rising home prices, the pain of homeownership hits hard.

If you’re looking to buy, budget for these extra expenses immediately. Consider searching for homes below your maximum budget so you have some flexibility for unexpected costs. Also, consider negotiating closing costs to help lighten the financial load.

4. React smart, not scared. It’s important to know that tariffs, which are taxes on imported goods, can affect the prices of materials you might use in your home. Mortgage rates, on the other hand, determine how much you’ll pay to borrow money for your home.

Whether you’re buying or renovating, the smartest move is to stay informed and patient. Tariffs may be out of your control, but how you react to this market matters more.

For example, if you’re renovating, shop around for local materials to dodge some tariff costs. If you’re selling, price your home competitively to attract buyers despite higher costs. And if you’re buying, explore loan options like FHA or VA to offset rate hikes.

Talk about tariffs has slowed down lately, which is good news. Those extra pieces of wood in your garage? They might be worth something now, kind of like toilet paper was during COVID. It’s important to think things through before you make a decision. Stay patient, do your research, and be ready for rising costs.

If you need help figuring out your next steps, I’m here to assist you in making smart choices, not emotional ones. Contact me at (443) 375-2224 or send a message to nick@storyline-homes.com. Let’s find opportunities in this tricky market together.