Homebuilder Stocks Sink on Worries Trump Tariffs Could Raise Costs

Key Takeaways

Shares of several homebuilders and construction companies lost ground Monday on worries that new
tariffs
could raise building costs.

D.R. Horton (

DHI

), Lennar Corporation (

LEN

), Toll Brothers (

TOL

), and PulteGroup (

PHM

) shares all fell more than 3% Monday, amid
broader market declines
after President Donald Trump signed
executive orders
over the weekend calling for 25% tariffs on Canada and Mexico, and 10% tariffs on China. The tariffs were set to go into effect Tuesday, before Trump on Monday
agreed to delay
the tariffs on Canada and Mexico for about a month.

Tariffs Could Raise Prices for Homebuyers as Building Costs Climb, NAHB Says

National Association of Home Builders Chair Carl Harris said on Saturday that the move could increase prices for homebuyers as costs rise for builders, with some 70% of the softwood lumber and gypsum imported into the U.S. for homebuilding coming from Canada and Mexico, respectively.

“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” Harris said in a statement.

Lennar executives said in the company’s earnings call last month that tariffs could add an estimated $5,000 to $7,000 to the cost of each home it builds.

Read the original article on
Investopedia