Although they were a moving target, President Donald Trump’s tariffs have increased the cost of building a home.
“The new tariffs could increase builders’ costs anywhere from $7,500 to $10,000 per home,” Rob Dietz, chief economist at the National Association of Home Builders, told CNBC, citing estimates from U.S. builders. Last year, the NAHB estimated that every $1,000 increase in the average new home price price tag is about 106,000 potential buyers.
So far, the biggest impact has been felt in lumber prices, “which are expected to total about $4,900 per home on average, according to Leading Builders of America, the trade group that represents most of the nation’s publicly traded homebuilders,” the website reported.
While the United States produces lumber, about one-third of all lumber purchased for home construction comes from Canada. Domestic lumber producers generally raise their prices to match import prices.
Rising lumber prices are hurting the entire homebuilding industry, and the lack of certainty adds complexity to the homebuilding process, said Steve Martinez, president of Tradewinds General Contracting in Boise, Idaho, with NAHB.
“Our contracts are all fixed price – meaning that from the time we bid on a project to the time we start to the time we order the materials, the prices could change drastically,” explained Martinez. “But we try to pre-order as much material as possible.”
Although rising and volatile prices affect major players like Home Depot, they are better able to mitigate and predict the impact than smaller retailers.
North American Builder’s Supply, an Illinois-based Home Depot and Lowe’s rival, has filed for Chapter 11 bankruptcy protection.
The company remained open and plans to reorganize and continue operations, according to data shared by RK Consultants on X, formerly Twitter.
“North American Builders Supply, Inc., a Yorkville, Illinois-based building materials supplier, filed for Chapter 11 protection on December 3, 2025, in the Northern District of Illinois. The company reported between $500,001 and $1 million in both assets and estimated liabilities,” according to the consulting firm.
The filing lists numerous trade creditors and lines of credit among the largest unsecured claims. Principal unsecured creditors include Bluetape, Inc. ($503,219), Kapitus Servicing, Inc. ($149,596) and an unsecured portion of a claim from Central Bank Illinois ($94,131).
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North American Builders Supply has reportedly filed for bankruptcy protection – a Chapter 11 filing December 3, 2025. Source: RK Consultants
The filing appears to stem from financial difficulties, including claims and a lawsuit from lender Proventure Capital LLC. Source: Trellis Law
The legal complaint states that Proventure Capital assumes unpaid obligations by North American Builders Supply (and/or one of its officers), indicating that the bankruptcy involves pressure from creditors and litigation. Source: Trellis Law
Because bankruptcy protection is Chapter 11, the company can try reorganization rather than outright liquidation (at least initially). Sources: RK Consultants, Pacer Monitor
The bankruptcy was also reported by Daily Distressed Asset Central, which provided a case number, 25-18572, in the Northern Illinois Bankruptcy Court. This report shows that the Chapter 11 filing was voluntary.
Large construction and home improvement supply chains have a greater ability to mitigate rates than their smaller rivals.
On the third quarter earnings call, Home Depot Executive Vice President of Merchandising William Bastek commented on the tariffs.
“Over 50% of our inventory is non-tariff and it’s obviously from domestic sources. So we’ll continue to watch that and look forward to the fourth quarter,” he said.
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In some cases, Home Depot may simply mitigate rate-related price increases by not offering as many discounts.
“If you think about our work, which is to contribute to the impact on rate pressure, being a little less promotional in a few of those garden areas was just the nature of what we did in Q2. And again, 4 of those 5 categories that we saw an impact from were related to some of the smaller-ticket garden projects,” he shared during the chain’s second quarter earnings call.
Lowe’s CFO Brandon Sink talked about how the tariffs have affected his company’s inventory.
“Inventory ended Q3 at $17.2 billion, down about $400 million from the prior year. This net decrease also reflects the inclusion of inventory from recent acquisitions of about $600 million and higher charges,” he said during Lowe’s third-quarter earnings call.
He noted that this is an ongoing moving target issue that the company is monitoring.
“We’re continuing to look at the rates, the ones that are increasing here in Q3, we expect that to continue in Q4, and the closing will affect the first half of the year. So working that out and trying to understand how that affects both sales margin and operating margin going forward,” he added.
“Canadian lumber is up 14.5%. Concrete prices are up 8%. Appliances were expected to rise as much as 20%. Suddenly the question was not how to build affordably – but whether starter homes could be built profitably,” said Cotality/CoreLogic.
“However, without new housing supply, the prices of existing homes will continue to rise, pushing affordability even further out of reach.”
As someone currently building a new home in Florida, there are risks for both the builder and the buyer. When you sign a contract to build a new home, you lock in the price.
If material costs go down, the builder makes more money, and you’ve paid more. If they rise, the builder risks losing money, which means that during volatile times, builders generally add an extra margin, which increases costs for homebuyers.
“Already, the average cost of new construction in the U.S. is $422,000. Adding in potential material cost increases from tariffs would add $17,000 to $22,000 to that price,” Cotality data shows.
Related: Lowe’s announces freebie for customers amid struggles
This story was originally published by TheStreet on December 4, 2025, where it first appeared in the Retail section. Add TheStreet as a favorite source by clicking here.
