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America’s Housing Supply Crisis: Is the Suburban Frontier Closing?

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American housing market is facing a persistent shortage. Home prices have reached historic highs and affordability has declined. Normally, in response to higher prices, housing supply would increase. However, new home construction has not kept pace with population growth and household formation, especially following the surge of demand in the wake of the pandemic. Recent research has claimed that the relationship between prices and supply has become diluted over time because of regulatory barriers and political dynamics. 

 A recent working paper “America’s Housing Supply Problem: the Closing of the Suburban Frontier?” by economist Edward Glaser and Joseph Gyourko, took a deep dive into why the supply of new housing has shifted lower, especially in the sunbelt regions like Dallas, Atlanta, and Phoenix. These areas, which once led the nation in new home construction, are now seeing a sharp slowdown.  

This research showed that the once-strong link between increasing home prices and new home constructions has weakened or even reversed in many metro areas. The authors analyzed Census tract data from the 1970s to the 2010 to track how construction has responded to price changes over time. Housing markets that used to expand rapidly in response to higher prices are now largely unresponsive. This breakdown in market dynamics reflects the growing influence of regulatory barriers and political constraints. 

Land use regulations, zoning restrictions, and permitting processes have become more restrictive since the 2000s. These constraints increase the cost and difficulty of building new homes, even as home prices increase. Therefore, housing supply is less responsive to demand. The latest NAHB study on this topic shows that regulations now account for nearly $94,000 of the average new home price. Furthermore, housing supply is becoming endogenous or determined by local socioeconomic dynamics. As neighborhoods become more affluent, wealthier or in some cases higher educated, residents are more likely to oppose new development through changing the permit environment or increasing zoning restrictions. In effect, demand is no longer driving the supply through NIMBYism. 

The authors use prices and density to explore where and why new housing is built. The traditional negative relationship between density and housing construction has weakened, or in some cases, reversed in recent decades. The results show that housing supply growth has slowed significantly in low-density areas, particularly in the areas with higher home prices, where much of the housing expansion would traditionally have been expected. This shift reflects the growing impact of regulatory barriers, as suburban and low-density areas now face stricter zoning, and longer permitting processes. These factors make building more homes more difficult and less responsive to demands or market signals. 

The striking finding of this new analysis is that the traditional engine of home building in the South is weakening. The South has had stronger population growth and lower regulatory barriers to land development and home construction than most of the rest of the country.  But as incomes have increased, the authors claim that regulatory barriers have increased, slowing this once fast-growing region. 

Despite the higher home prices, builders face challenges, including higher interest rates, rising inflations, lot and labor shortages, and regulations, that prevent them from building more new homes. According to NAHB’s estimates, based on 2021 data, the U.S. needs 1.5 million additional units to fill the housing shortage gap. In short, the combination of regulatory barriers and economic headwinds continues to hamper housing production nationwide and these challenges are expanding to regions of the country that were once less affected. 

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Fed Remains on Pause Again

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At the conclusion of its July meeting, the Federal Reserve’s monetary policy committee once again held the federal funds rate constant at a top rate of 4.5%. However, two members of the committee dissented from the decision (Fed Board Governors Waller and Bowman), the largest number of dissenting votes since 1993.

Moreover, some economic data – including a slowing housing market – are pointing to a need to resume normalizing the federal funds rate from its current, restrictive stance. In particular, Chair Powell noted in his press conference that the “housing market remains weak” and policy is “modestly restrictive.” NAHB is forecasting two rate reductions before the end of the year, including one at the next Fed meeting in September. President Trump has made it clear that he believes the central bank needs to cut again. All that said, except for the presence of dissenting votes in today’s decision, the Fed’s statement did not appear to be more dovish than those of prior months, which is indicative that the Fed remains data dependent.

While the Fed pointed to moderating growth, including a soft first quarter, “elevated uncertainty” about the outlook continues to be cited by the central bank. It is the case that evolving tariff policy, and trade negotiations in general, represent an uncertainty risk (although some, like Governor Waller, argue that tariff effects will represent a one-time effect on prices, not a source of ongoing inflation).

However, the combination of a quick move for cuts at the end of 2024 and the subsequent long, ongoing pause in 2025 is itself a source of uncertainty, particularly for businesses in sectors like residential construction whose financing costs are tied to short-term lending rates controlled by the Federal Reserve. The continued decline for service sector inflation points to moderating overall inflation, which when combined with softening job openings data and growing specifics about trade policy, provides justification for a resumption of continued monetary policy easing.

While a reduction in the federal funds rate would help the supply-side of the housing market via builder financing costs, long-term rates like mortgage interest rates are determined by investors and the bond market, not the Fed. So, while the economy would benefit from a resumption of monetary policy easing, impactful reductions for long-term interest rates depends on declines for inflation expectations, improvement of the government’s deficit outlook, and gains for productivity for the economy.

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Lot Values Trend Higher in 2024

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Despite shrinking lot sizes, values for single-family detached spec home lots continued to rise, with the national median outpacing U.S. inflation and reaching a new high in 2024. The U.S. median lot value for single-family detached for-sale homes started in 2024 stood at $60,000, according to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data.

Even though the national median lot value grew faster than U.S. inflation in 2024, it remains below the record levels of the housing boom of 2005-2006, when adjusted for inflation. At that time, half of the lots were valued at or over $43,000, equivalent to about $67,000 when converted into inflation-adjusted 2024 dollars.

Rising lot values stand out against the backdrop of dramatic shifts towards smaller lots in new spec home construction in recent years. Since the housing boom of 2005-2006, the share of lots under 1/5 of an acre rose from 48% in 2005 to 65% in 2024. Consequently, even though current median lot values are not record-breaking in real terms, they reflect a very different mix of lots compared to the housing boom years or even a decade ago. 

The fact that lot values continue to appreciate as their sizes shrink reflects ongoing challenges builders face in obtaining lots. Although lot shortages are not quite as widespread as they were in 2021, their current incidence, recorded by the May 2025 survey for the NAHB/Wells Fargo Housing Market Index (HMI), remains elevated, with 64% of builders rating the supply of developed lots as low or very low.

There is a substantial variation in lot values and appreciation across U.S. regions. New England and the Pacific stand out as the two divisions with the most expensive lots. Per the latest SOC data, half of all single-family detached (SFD) spec homes started in New England in 2024 were built on lots valued at or over $150,000. New England is known for strict local zoning regulations that often require very low density. As a matter of fact, the median lot size for single-family detached spec homes started in New England in 2024 was three times the national median. Therefore, it is not surprising that typical SFD spec homes in New England are built on some of the largest and most expensive lots in the nation.

The regional differences in lot sizes cannot fully explain the wide variation in lot values. The Pacific division, where the developable land is scarce, has the smallest lots. However, its median lot value reached $152,000 in 2024, the highest median in the nation. As a result, the Pacific division lots stand out as the most expensive in the country in terms of cost per acre.

The Middle Atlantic division hit a new record high in 2024, with half of the lots for SFD spec home starts valued at or above $97,000. This made the Middle Atlantic the third most expensive division in the U.S.

The East South Central and South Atlantic divisions are home to some of the least expensive spec home lots in the nation. The East South Central division recorded the lowest median lot value, at $48,000. Typical lots here are also significantly larger than the national median, thus defining some of the most economical lots, as well as the lowest cost per acre in the U.S. The neighboring South Atlantic is another division where the median lot value ($53,000) is below the national median of $60,000.

Lots in the West South Central, which includes Texas, appreciated dramatically over the last decade.  In 2012, half of the SFD spec homes were started on lots valued at or below $30,000, close to half of the current median of $58,000.

For this analysis, median lot values were chosen over averages, since averages tend to be heavily influenced by extreme outliers. In addition, the Census Bureau often masks extreme lot values in the public use SOC dataset, making it difficult to calculate averages precisely, but medians remain unaffected by these procedures.

This analysis is limited to single-family speculatively built homes by year started and with reported sales prices. For custom homes built on an owner’s land with either the owner or a builder acting as the general contractor, the corresponding land values are not reported in the SOC. Consequently, custom homes are excluded from this analysis.

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The Fed Pause Continues

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Reflecting most forecasters’ expectations for the June FOMC meeting, the Federal Reserve continued its post-2024 pause for federal funds rate cuts, retaining a target rate of 4.5% to 4.25%. The pause comes after a 100 basis point series of reductions in late 2024. Despite these cuts, mortgage rates have remained in the high 6% range. The Fed also held unchanged its ongoing quantitative tightening program, which is more strongly focused on balance sheet reduction for mortgage-backed securities (MBS).

The Fed reaffirmed its policy commitment to achieve maximum employment and reduce inflation to a two percent target rate. During the 2025 policy pause, the Fed remains data dependent in a “wait and see” mode for developments in areas like tariff policy. Chair Powell noted that we learn more about tariffs later this summer. NAHB’s forecast incorporates two rate cuts from the Fed for 2025, one in the third quarter and one in the fourth quarter.

The Fed noted that economic activity continues at a “solid pace,” however swings in imports affected the first quarter GDP data. The central bank also stated that the unemployment rate remains low and inflation remains “somewhat elevated.”

I would note that the primary driver of this elevated inflation is ongoing high rates of shelter inflation, which reflect significant, underlying increases for residential construction costs for the post-covid period. During his press conference, Chair Powell cited that the housing market suffers from both long-run and short-run issues, involving affordability and a [structural] housing shortage. In prior comments to Congress, Powell has noted that home builders face a perfect storm of challenges from both the demand- and supply-sides of the market.

The Federal Reserve also published an update for its Summary of Economic Projections (SEP). Compared to its prior March projections, the Fed reduced its 2025 GDP forecast from 1.7% to 1.4% (year-over-year rate from the fourth quarter). During his press conference, Chair Powell linked policy uncertainty as a complicating factor for economic growth. Additionally in the SEP, the Fed slightly increased its 2025 forecast for the unemployment rate in the fourth quarter from 4.4% to 4.5%.

The central bank also increased its core PCE inflation projection for the final quarter of the year from 2.8% to 3.1%. During his press conference, Chair Powell noted that economic forecasters cited tariff policy as a contributing factor for a higher than expected level of inflation for 2025. He specifically projected that a measurable amount of inflation will arrive to the economy this summer. There is some debate among economists whether tariffs would have just a one-time impact on the aggregate price level, which would not be inflation pressure felt over a sustained period of time, or would in fact be a factor increasing inflation as a series of price increases.

Looking forward to future monetary policy, the “dot plot” projections of the SEP leave the Fed forecasting two rate cuts in 2025, followed by just one reduction in 2026 and one more cut in 2027. This projection removes one rate cute from both 2026 and 2027 compared to the March dot plot, although the Fed continues to point to 3% as the long-run, terminal rate for the federal funds rate.

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States with Highest and Fastest Rising Construction Wages, 2025

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Wage growth in construction continued to decelerate in April on a national basis, but the differences across regional markets remain stark. Nationally, average hourly earnings (AHE) in construction increased 3.6% year-over-year and crossed the $39.3 mark when averaged across all payroll employees (non-seasonally adjusted, NSA). Meanwhile, average earnings in construction in Alaska and Massachusetts exceeded $50 per hour (NSA). Across states, the annual growth rate in AHE ranged from 10.6% in Nevada to a decline of 3% in Oklahoma. This is according to the latest Current Employment Statistics (CES) report from the Bureau of Labor Statistics (BLS).   

Average hourly earnings (AHE) in construction vary greatly across 43 states that report these data. Alaska, states along the Pacific coast, Illinois, Minnesota, and the majority of states in Northeast record the highest AHE. As of April 2025, fourteen states report average earnings (NSA) exceeding $40 per hour.

At the other end of the spectrum, nine states report NSA average hourly earnings in construction under $34. The states with the lowest AHE are mostly in the South, with Arkansas reporting the lowest rate of $29.3 per hour.

While differences in regional hourly rates reflect variation in the cost of living across states among other things, the faster growing wages are more likely to indicate specific labor markets that are particularly tight. Year-over-year, Nevada, Mississippi, Alaska, Colorado, Texas, Florida, South Carolina, and Montana reported fastest growing hourly wages in construction, more than doubling the national average growth of 3.6%. Nevada reported the largest annual increase of 10.6%, while the growth rate in Mississippi and Alaska was just under 10%.

In sharp contrast, Oklahoma registered a decline in hourly wages of 3%. Five other states reported modestly declining hourly rates in construction, compared to a year ago – Louisiana, Missouri, Rhode Island, California, and Wisconsin.

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Highest Paid Occupations in Construction in 2024

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Half of payroll workers in construction earn more than $60,320 and the top 25% make at least $81,510, according to the latest May 2024 Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) and analysis by the National Association of Home Builders (NAHB). In comparison, the U.S. median annual pay is $49,500, while the top quartile (the highest paid 25%) makes at least $78,810.

The OEWS publishes wages for almost 400 occupations in construction. Out of these, only 46 are construction trades. The other construction industry workers are in finance, sales, administration and other off-site activities.

In 2024, the highest paid occupation in construction is lawyers with wages of $180,520 per year, and the top 25 percent making over $238,720. Traditionally, Chief Executive Officer (CEO) occupy the top paid position in the industry, but in 2024, they are second on the list, with half of CEOs making over $174,030, while the wages of the top quartile remain undisclosed.

Out of the top twenty highest paid occupations in construction, fourteen are various managers. The highest paid managers in construction are architectural and engineering managers, with half of them making over $153,510 and the top 25 percent on the pay scale earning over $181,150 annually.

The architectural and engineering managers also stand out for having a smaller salary range spread, measured as a percentage difference between the bottom and top 25 percent pay levels. Only computer and information systems (CIS) managers have a narrower pay range among managers in construction. The annual pay of the highest paid 25 percent CIS managers in construction is at least $168,850, which is 40% higher than the top earnings of the lowest paid quartile ($119,990). In contrast, higher-level positions, such as lawyers and CEOs, have a noticeably wider pay scale spread. The top 25 percent highest paid lawyers make more than double of the bottom quartile pay, potentially reflecting a greater range of responsibilities and opportunities for career advancement for lawyers in construction.

Among construction trades, elevator installers and repairers top the median wages list with half of them earning over $108,130 a year, and the top 25% making at least $133,370. This is also the only construction trade that made the industry overall top 20 highest paid occupations list. 

First-line supervisors of construction trades are next on the trade list; their median wages are $78,900, with the top 25% highest paid supervisors earning more than $100,150.  

In general, construction trades that require more years of formal education tend to offer higher annual wages. Median wages of construction and building inspectors are $66,340 and the top quartile is $89,550. This is also the trade with a relatively wide pay scale spread, with the top 25 percent making at least 74% more than the bottom quartile, potentially reflecting a wider variance in educational attainment, professional responsibilities and expertise of building inspectors.

Carpenters are one of the most prevalent construction crafts in the industry. The trade requires less formal education. Nevertheless, the median wages of carpenters working in construction exceed the national median. Half of these craftsmen earn over $59,890 and the highest paid 25 percent bring in at least $76,290.

Plumbers and electricians, trades that typically require specialized training and licensing, earn higher annual wages. Half of plumbers in construction earn over $62,820, with the top quartile making over $81,740. Electricians’ wages are similarly high.

The construction trade with the greatest pay range spread is pile driver operators. The top 25 percent highest paid operators earn at least $105,100, over 100% more than the bottom quartile. This wide pay scale presumably reflects a greater variety of opportunities and geographic locations (some pile driver operators work on offshore rigs), as well as varying degree of technical expertise and training (some equipment comes with computerized controls and requires additional knowledge of electronics).

In contrast, solar photovoltaic installers, a relatively new construction trade, have a much narrower pay scale. The difference between the annual pay of the top 25 percent ($65,850) and the bottom quartile ($48,350) is 36%, likely reflecting less variation in expertise, training, and geographic prevalence.

Typically, construction trades that require less skill not only offer lower wages but also show less variation in pay. Apprentice workers (helpers of painters, plumbers, electricians, roofers, carpenters, and other construction trades) illustrate this point. These are the six lowest paid construction occupations that simultaneously show the narrowest variation in pay. For example, the highest paid quartile of carpenters’ helpers makes at least $46,720 a year, while the bottom quartile earns at most $35,870, only a 30% difference.

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Fed Remains on Pause with Rising Uncertainty

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The Federal Reserve remained on pause with respect to rate cuts at the conclusion of its May meeting, maintaining the federal funds rate in the 4.25% to 4.5% range. Characterizing current market conditions, the central bank noted that the “unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.” However, the Fed noted that “inflation remains somewhat elevated.”

Today’s statement acknowledged the weak first quarter GDP report via a reference to “swings in net exports have affected data” but otherwise the economy continues to expand at a “solid pace.” The Fed also reiterated its commitment to maintain maximum employment and bring inflation back to its 2% target rate.

With respect to monetary policy, the Fed noted that uncertainty for the U.S. economy has increased. Mindful of its dual mandate (price stability and maximum employment), the Fed noted that the “risks of higher unemployment and higher inflation have risen.” This statement reflects the complex situation the Fed currently faces, with risks to both sides of its policy mandate increasing.

While todays statement does not explicitly reference tariff policy, the debate over tariffs is an obvious candidate for the source of these rising risks that would harm the labor market and raise prices. Indeed, Chair Powell referenced industry reports of tariff risks in his press conference. Many economists, who as a profession dislike tariffs, would argue that the Fed would likely move further on normalizing monetary policy and reducing rates, if not for the risks of future tariff policy.

In the meantime, as Chair Powell noted, otherwise solid economic conditions leave the Fed with moderately restrictive policy and “in a good place to wait and see” with respect to future policy.

Today’s statement noted that the Federal Open Market Committee “will carefully assess incoming data, the evolving outlook, and the balance of risks.” In particular, the Fed will review “readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

While the list of data sources the Fed is watching seems like everything but the kitchen sink, the Fed should be sure to watch sinks, windows, lighting fixtures, and other building material pricing and availability to gauge future economic and inflation conditions. Shelter inflation remains a leading source of ongoing elevated inflation. And shelter inflation can only be reduced by building more attainable housing.

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House Sharing is Not Just for Young Adults

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A record-high 6.8 million households shared their housing with unrelated housemates, roommates or boarders in 2023. While college-age and young adults make up the largest subset of house sharers (close to 41%), this type of living arrangement is gaining popularity among older householders fastest, with the 55+ segment accounting for 30% of all house-sharing households in 2023.

The number of households sharing housing with nonrelatives had been rising steadily since the 2008 housing crash until the COVID-19 pandemic interrupted the upward trend. During that period, the count of households with at least one unrelated member increased from 5.3 million in 2008 to over 6.7 million in 2019. At the same time, the percentage of house-sharing households grew from 4.7% to 5.4%.

The pandemic dramatically redefined living arrangement preferences. Reflecting the shift towards more spacious, lower-density independent living, the number and percentage of house-sharers collapsed in 2020 (although the data collection issues during the lockdown stages of the COVID-19 pandemic make the 2020 estimates less reliable).  While the percentage of households sharing housing has climbed since the pandemic lows, it remains below the 2019 peak. However, the count of house-sharing households in the U.S. is now at a new record-high point. This is largely reflective of a faster household formation rate since the end of the pandemic, as well as the growing popularity of home sharing arrangements.

Young Adults (25-34)

Young adults in the 25-34 age group make up the largest (close to 1.6 million, or 23%) cohort of households that share housing with unrelated housemates. Over the last two decades, amid the rising housing burdens and cost of living, house sharing became a way for young adults to afford to leave parental homes. From 2005 to 2017, as the headship rates for this age group declined precipitously and millions of young adults dropped out of the housing market, house sharing became more common among those who managed to stay out of parental homes. In 2017, when 25 to 34-year-old adults registered record low headship rates, one in eleven householders in this age group shared housing with unrelated housemates. By 2023, when the headship rates rebounded, the share of 25 to 34-year-old house-sharing householders dropped to 7.9%, on par with the 2005 reading.

While it is tempting to assume that the high prevalence of house sharing among young adults reflects a rise in unmarried partnerships, these are not considered house-sharers in this analysis.  Unmarried partners tend to function as a unit similar to a married couple, dividing their economic, social and financial responsibilities, and not just those related to house-sharing. To differentiate between these different demographic trends, unmarried partnerships are counted as independent households for the purposes of this analysis.

College-Age Adults (18-24)

College-age adults make up the second largest group of house-sharing householders (1.2 million, or 17%). While the total counts are substantial, they represent a decline since 2005 when 1.3 million 18 to 24-year-old householders shared housing with unrelated roommates, accounting for 22% of house-sharing households.  The lower counts of house sharers in this age group reflect, among other factors, the rising share of college-age adults living with parents, declining rates of college attendance in recent years, as well as slower youth population growth. Nevertheless, the youngest householders remain the age group that is most likely to share housing. As of 2023, over one in five leaseholders/homeowners in the 18-24 age group shared housing with unrelated roommates or housemates.

Older Adults 55+

Older adults ages 55 and over registered the most substantial gains in house-sharing arrangements since the housing boom of the mid-2000s[1]. The number of households lead by 55 to 64-year-old adults that shared housing almost doubled since 2005 to 1 million. Their segment increased from 9% of house-sharing households in 2005 to 14% in 2023. At the same time, the number of house-sharers among 65+ householders increased 2.7 times. These oldest householders now account for over a million, or 15% of all house-sharing households, more than doubling their share of 6.8% in 2005.

Partially, the surge in the number of older households sharing housing with nonrelatives simply reflects the aging U.S. population with numerous baby boomers filling the ranks of 55+ households. Partially, it captures the changing preferences, as the older householders are now more likely to live with unrelated members. In 2005, 3% of 55 to 64-year-old householders shared housing with nonrelatives. This share increased to 3.6% in 2013 and continued its climb to 4.1% in 2023. The increase in the percentage of 65+ householders sharing housing was similarly persistent, rising from 1.7% in 2005, to 2.3% in 2013, and climbing further to reach 2.8% in 2023.

Unlike the rates of house-sharing among younger adults, the rates for the 55+ age group appear less cyclical. While still largely unconventional among 55 and older householders, house sharing is on the rise, potentially offering a cost-effective option for older adults to stay in place as they age.

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Homeownership Rate Dips to Five-Year Low

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The homeownership rate declined to 65.1% in the first quarter of 2024, the lowest level since the first quarter of 2020, according to the Census’s Housing Vacancy Survey (HVS). Amid elevated mortgage interest rates and tight housing supply, housing affordability is at a multidecade low. Compared to the peak of 69.2% in 2004, the homeownership rate is 4.1 percentage points lower and remains below the 25-year average rate of 66.3%.

Homeownership rates declined across nearly all age groups over the past year, except those aged 65 and older. Among younger households, the homeownership rate for those under 35 rose slightly to 36.6% in the first quarter of 2024. However, it is still hovering at the lowest rate in the last 6 years. This age group, particularly sensitive to mortgage rates and the inventory of entry-level homes, saw the largest decline among all age categories (1.1 percentage points down). Similar declines were seen among the 35-44 group and 55-64 age group, with rates decreasing from 61.4% to 60.3% and from 76.3% to 75.2%, respectively. Homeownership rates for householders aged 45-54 dipped slightly from 70.8% to 70.6%. In contrast, those 65 years and over experienced a modest increase from 78.7% to 79%.

The national rental vacancy rate increased to 7.1% for the first quarter of 2025, returning to the pre-pandemic levels after several years of tight rental market. Meanwhile, the homeowner vacancy rate stayed at 1.1%, remaining near the survey’s 67-year low of 0.7%.

The housing stock-based HVS revealed that the count of total households increased to 132.2 million in the first quarter of 2025 from 131.0 million a year ago. The gains are due to gains in both renter household formation (1.2 million increase), and owner-occupied households (106,000 increase).

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Despite Exemptions and Delays, Tariffs are Already Affecting Builders

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Home builders have already started to feel the effects of U.S. tariff policy, according to recent NAHB member surveys. This is true even though the Administration did not announce its list of reciprocal tariffs until April 2nd, lumber along with USMCA-compliant imports from Canada and Mexico were exempt, and a week later the Administration enacted a 90-day hiatus, with tariffs on countries other China limited to 10% over this time. The Administration subsequently granted further temporary exemptions from the reciprocal tariffs for a broad range of electronic products imported from China.  

After all this, significant uncertainty about the final outcome still remains. The U.S. may revisit trade policy for Canada and Mexico, China-U.S. negotiations are unsettled, and the effects of the 10% tariff on building products from other countries are difficult to predict. Moreover, exactly what will happen at the end of the 90-day hiatus is unclear. In the meantime, economic uncertainty can adversely affect consumer confidence and make prospective home buyers hesitate. This is one of the reasons the NAHB/Wells Fargo Housing Market Index (HMI) declined in March.

The latest NAHB estimate (based on cost data from RSMeans and PPI inflation rates) is that the average new single-family home requires $174,155 worth of building materials. Previous NAHB research has shown that 7.3% of materials in residential construction, or $12,713 of materials costs for the average single-family home, is imported.

Based on this, it may seem that tariffs would have a limited effect on home builders. However, as noted above, the uncertainty caused by the mere announcement of tariffs can have an adverse effect on the behavior of consumers and even businesses. In recent surveys, NAHB builders and remodelers reported that building material suppliers had already increased their prices—by an average of 5.5% and 6.9%, respectively—due to announced, enacted or anticipated tariffs.

The data on builders came from the HMI survey and were collected during the first two weeks of March. The data on remodelers came from the survey for the NAHB/Westlake Royal Remodeling Market Index and were collected during the last week of March and first three days of April.

NAHB will continue to monitor material prices given the uncertainty and fluidity of the tariff situation. 

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