Homebuilders slump as lumber costs are poised to surge
Lumber is up on Canadian tariff threat.
With long-term interest rates falling Monday (which carries mortgage rates lower, too) one might expect homebuilders to be getting a lift in the market today, all else equal.
But, of course, all else is never equal, and the reason rates are down — a flight-to-safety trade set off by President Trump’s tariffs on Canada and (now delayed) Mexico — is also a reason that homebuilders are taking their lumps.
PulteGroup, D.R. Horton, Lennar, and NVR are all down, thanks largely to the fact that they’d be facing sharply higher lumber costs in the near term, thanks to the Trump administration’s announced tariffs. (Of course, who knows if or when the tariffs will go into effect — Mexico negotiated a monthlong pause by making some concessions on Monday.)
The National Association of Homebuilders had this to say Monday:
“More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum (used for drywall) — come 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.”
A Colorado mill owner told The Wall Street Journal that the tariffs are “going to make a vast swath of Canadian production unbuyable overnight,” he said. “Whatever lumber is available for sale today, I’m confident there will be less available for sale 90 days from now.”
