Will New Tariffs Make Homes More Expensive?

By Kerry Ellison

Over the past 30 years, Kerry has proven herself time and time again by remaining in the top tier of Central Arkansas real estate. As her business grew, Kerry saw the need to start a team to continue providing clients with the best experience possible.

President Trump recently announced sweeping new tariffs, including a 10% baseline on most imports and a 25% tax on all foreign vehicles. While the move is being hailed as a win for American manufacturing, it could also have major ripple effects on the housing market—and your wallet.

If you’re planning to buy, build, or finance a home, here are three key ways these new trade policies could affect you:

1. Construction costs are likely to rise. About 10% of materials used in U.S. homebuilding are imported, including essentials like drywall, appliances, and, most importantly, lumber. The National Association of Home Builders (NAHB) says that builders are already preparing for increased costs ranging around $7,500 per new home. While Canada and Mexico—two key suppliers—were exempted from the initial tariff announcement, they’ll soon face a 10% tariff under the “reciprocal” baseline policy.

With the U.S. already facing a housing shortage, this could make it even harder for builders to deliver affordable homes at the price points most needed.

2. Mortgage rates could stay higher for longer. Tariffs often lead to inflation, and inflation is the number one reason the Federal Reserve pauses or reverses interest rate cuts. Despite campaign promises to lower mortgage rates, the current 30-year fixed rates have remained above 6.6% for months. If these tariffs drive up consumer prices across the board, the Fed could delay any plans to lower rates, keeping borrowing costs higher well into 2025. So, while many are hoping for relief, new trade policies may end up having the opposite effect.

3. Homebuyers could lose even more buying power. Here’s the catch: if both home prices and mortgage rates stay high, buyers get squeezed on both sides. For anyone already stretching to afford a down payment or monthly mortgage, that’s a significant hit. For some, it could be the difference between qualifying for a home and sitting on the sidelines.

4. Tariffs: The wild card that could go either way. Tariffs are kind of like the wild card in a deck—you never really know how they’ll play out. On one hand, they’re raising costs and making things tougher in the short term, but on the other hand, if housing inventory keeps growing and mortgage rates level out, tariffs might actually help push inflation down.

If inflation drops, we could see interest rates come down faster than expected. So while tariffs are causing some pain now, there’s a chance they could help the market in a roundabout way. It’s not a sure thing, but it’s possible.

If you’re thinking about making a move—whether it’s buying, building, or refinancing—it’s important to be proactive. These economic shifts can feel abstract, but their impact on your personal finances is very real.

Schedule a 1-on-1 call with us today at 501-725-1227 or email us at info@theellisongroup.com to review your options, lock in the right timing, and make sure you’re positioned to succeed—before prices or rates change again.