New-home sales rise, but looming tariffs could stall progress

The report includes good news for prospective homebuyers. Inventory continues to rise rapidly, with the total number of available new homes for sale hitting 500,000, up 7.8% year over year. The median sales price was $414,500, a 3.1% decline from January and up 1.5% year over year.

Still, overall inventory remains limited, and despite the recent drop in mortgage rates, they remain an obstacle for many home shoppers.

“New home sales have been roughly flat thus far in 2025, as ongoing limited inventory of existing homes in many markets continues to support the need for new homes,” Buddy Hughes, chairman of the National Association of Home Builders (NAHB), said in a statement.

“Although policy uncertainty may be holding back some home buyer and business decisions, builders have hope that regulatory reform and tax policy extension will act as tailwinds later this year.”

The slightly improving market for new-home sales coincides with similarly positive news for existing homes. The February report from the National Association of Realtors (NAR) showed existing-home sales at a seasonally adjusted annual rate of 4.26 million, a 4.2% rise compared to January but a 1.2% decline year over year.

The relative bright spot for homebuilders may be short lived as President Donald Trump continues to threaten a wide variety of tariffs that seemingly shift on a daily basis. Some of these would have a direct impact on the costs of building materials.

The president has already placed a 25% tariff on steel and aluminum — and has floated the idea of doubling it to 50%. He’s threatened various tariffs on Canadian lumber, including a “reciprocal” tariff that would have the U.S. match Canada’s tariff on American lumber. The silver lining for builders there is that Canada does not have a tariff on lumber imports from the U.S.

April 2 is a critical day for homebuilders. That’s when the one-month pause on Mexican and Canadian tariffs is scheduled to expire. Should Trump let that happen, it would resume a 25% tariff on goods from these countries that aren’t covered by the United States-Mexico-Canada Agreement (USMCA).

Even more explosive for April 2 is that Trump’s global reciprocal tariffs are set to take effect. This would have the U.S. match the tariffs that other countries place on American exports. While the specifics and logistics of this policy are currently in flux, it has the potential to upend economies and businesses around the world.

The situation has builders feeling down, as the NAHB/Wells Fargo Housing Market Index (HMI) has shown builder confidence dropping by six points in February and March. NAHB said it’s received reports that builders are already pricing in an additional $7,500 to $10,000 for the cost of construction, despite the fact that some of the tariffs haven’t taken effect.

​​”A factor that is worth watching is the pace of new home construction,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Right now, new home inventory is rising because there are fewer buyers and homes that were started last year are sitting vacant. But some home builders are pulling back on starts and permits for new construction as they assess the potential impacts of tariffs and immigration policies.”