Photo: Robert Clark
Tariffs on imported lumber imposed by the Trump administration are the likely behind the steep decline in US housing starts recorded in June.
Homebuilders are struggling to build at a competitive price as material costs soar, leaving many homebuyers out in the cold as the inventory crisis worsens, according to a report released earlier this by the National Association of Home Builders (NAHB).
Tariffs on Canadian lumber, in particular, as well as on other building materials, have shaken builders’ overall confidence in the housing market — even as buyer demand heats up.
“June’s soft permit report does not suggest a significant increase in housing production in the near term but consumer demand for single-family housing continues to increase as the overall economy and labor market strengthen,” NAHB Senior Economist Michael Neal says in the report.
Over the last month, total housing starts fell 12.3 percent in June to a seasonally adjusted annual rate (SAAR) of 1.17 million units in June.
And, at the same time, single-family starts dropped 9.1 percent to a SAAR of 850,000 units . The multi-family sector, which includes apartments and condos, fell 19.8 percent to an (SAAR) of 315,000 units.
Combined single- and multi-family housing starts fell from the previous month in all regions of the country in June.
Overall, permits — which are a sign of likely future housing production — dropped 2.2 percent to 1.27 million units (SAAR) in June — the lowest level of the year.
And while NAHB reports that overall housing production was 7.8 percent higher year-over-year, the June report raises significant concerns about “a softening in housing production over the near term.”
“We have been warning the (Trump) administration for months that the ongoing increases in lumber prices stemming from both the tariffs and profiteering this year are having a strong impact on builders’ ability to meet growing consumer demand,” NAHB Chairman Randy Noel writes in the digital release.
Back in 2016, when then candidate Trump spoke at a NAHB event in Miami, he claimed that as much as 25 percent of current home building costs is due to regulation, calling it a “sad story.”
The Trump administration imposed tariffs on Canadian lumber last summer, and NAHB previously reported that record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.
NAHB didn’t respond to request for a comment on how its members felt about President Trump following the introduction of the tariffs last year.
Homebuilders aren’t the only ones who have been critical of Trump’s tariffs.
According to the results of a timely poll released yesterday by the nonpartisan think tank Pew Research Center, nearly 50 percent of American adults believe increased tariffs between the US and its trading partners will be bad for the country.
Click here to read the entire release.