In an already tight housing market, home builders are facing growing challenges that could worsen the ongoing U.S. housing shortage. According to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, builder confidence remained low in April — a sign that economic pressures and trade policy concerns are hitting the construction industry hard.

How Tariffs Are Driving Up Homebuilding Costs

One of the biggest concerns cited by builders is the impact of tariffs on imported materials and equipment. In a recent NAHB survey, 60% of home builders reported that their suppliers have already raised prices — or plan to — due to new tariffs.

The estimated additional cost per home? Nearly $11,000.

For many builders, this added expense makes it more difficult to keep projects on budget, especially for entry-level homes and affordable housing developments. With rising costs, builders may slow down or scale back on construction — a trend that can worsen the already strained housing inventory across the U.S.

The National Housing Shortage: A Growing Concern

Economists estimate the U.S. is currently short between 1.5 million and 4 million homes. This deficit is a major factor behind sky-high housing prices and rising rents, particularly in high-demand markets like Philadelphia and the surrounding suburbs.

Without a steady increase in new construction, home prices will likely remain elevated, making it harder for first-time buyers to enter the market and pushing affordability further out of reach.

What This Means for Buyers and Sellers

For homebuyers, especially those searching in competitive markets, this news underscores the urgency of being prepared. With fewer new homes hitting the market, buyers may continue facing tight inventory and bidding wars. Getting pre-approved, working with a knowledgeable real estate agent, and staying flexible on location or features can help you navigate this market successfully.

For sellers, this environment could mean continued strong demand — especially for well-maintained, move-in ready homes. With fewer new builds competing for attention, resale properties in desirable areas may hold or increase their value.

Final Thoughts

Whether you’re buying, selling, or just keeping an eye on the market, staying informed about the economic factors shaping real estate is key. The current mix of tariffs, economic uncertainty, and limited inventory is creating a perfect storm that continues to impact buyers and builders alike.

Source: The Philadelphia Inquirer, April 19, 2025