Three weeks ago, I shared insights about the potential impact of new tariffs on our local housing market. Today, I'm back with a crucial update based on what major homebuilders are actually experiencing since those tariffs took effect on April 5th.

Table of Contents

• What We're Learning from the Builders

• What Materials Are Most Vulnerable?

• Utah Market Implications

• The Bigger Economic Picture

• What Should You Do Now?

• Let's Connect

What We're Learning from the Builders

The initial concerns about dramatic cost increases appear to be moderating. Five of America's largest homebuilders have now reported their first assessments, and the picture is more nuanced than many expected:

D.R. Horton (the nation's largest homebuilder) reports they "haven't seen anything substantially coming across in the way of price increases" yet. Their CEO Paul Romanowski noted that while about 20% of their lumber comes from Canada, they don't anticipate major lumber price impacts until late 2025 or into 2026.

Lennar (second-largest builder) stated in late March they had "no impact to our cost from tariffs" and are working with suppliers to mitigate potential increases through "alternative sourcing and material strategies."

PulteGroup (America's third-largest homebuilder) has provided the most specific estimate, projecting tariffs will increase construction costs by approximately 1% of a home's final sales price. However, they don't expect to see significant impacts until "mid to late fourth quarter closings" of this year.

KB Home and M/I Homes similarly report minimal impacts so far, with M/I Homes' CEO Robert Schottenstein noting their costs "are essentially what they were a year ago" and in some cases "slightly lower."

What Materials Are Most Vulnerable?

While the overall impact appears more moderate than initially feared, certain construction components are more exposed to tariff effects:

• Plumbing fixtures (especially tank water heaters)

• HVAC parts from China

• Porcelain and tile flooring

• Electrical components (circuit breakers, load centers)

Utah Market Implications

This new information suggests several key takeaways for our local market:

1. More gradual impact: Rather than the immediate $7,500-$10,000 per home increase some analysts predicted, we're seeing a more measured response from builders who are working to absorb and mitigate these costs.

2. Timing matters: If you're buying a new construction home that will close in the next few months, you may avoid most tariff-related price increases. Homes closing in late 2025 are more likely to reflect these additional costs.

3. Existing homes gain appeal: As I mentioned in my previous newsletter, even modest increases in new construction costs could make existing homes relatively more attractive to buyers.

4. Mortgage rates and Incentives: The initial drop in mortgage rates following the tariff announcement has provided a window of opportunity for buyers. If you're considering a purchase, locking in these rates could offset potential future construction cost increases. Many builders are offering exceptional incentives to offset this challenge—including interest rate buy downs to as low as 4.99% with an additional 3% seller concessions that can be used to either reduce first-year rates to just 2.99%, or offset closing costs. For buyers, these solutions can save thousands over the life of your loan, and make housing much more affordable, while sellers continue to benefit from high selling prices.

The Bigger Economic Picture

According to the U.S. Bureau of Economic Analysts, the most significant impact on housing might not come from direct construction costs but rather from how tariffs affect the broader economy, interest rates, and housing demand. With imports now representing 14% of U.S. GDP (compared to just 5.2% in 1970), our economy is more sensitive to trade policy changes than in previous decades. I will continue keeping you updated on how these tariff changes are impacting the Utah economy and housing market.

What Should You Do Now?

If you're currently in the market:

• Consider accelerating your new home purchase to close before late 2025 when tariff impacts are expected to be more fully reflected in pricing

• Keep an eye on builder incentives, which may change as they adjust to the new cost environment

• Don't panic—the 1% cost increase projection is significantly lower than earlier fears of 4-6% increases

• Remember that builders have limited ability to pass costs directly to consumers in our current market

Let's Connect

Whether you're looking to buy, sell, or simply want to discuss how these economic developments might affect your specific situation, I'm here to help you navigate these changing market conditions.

Call or text me this week to schedule a personalized consultation. I'd be happy to provide insights tailored to your unique real estate goals.

Here to serve,

P.S. Did you find this update valuable? Please forward it to friends or family who might benefit from staying informed about our local real estate market!