While a moving target, President Donald Trump’s tariffs have raised the cost of building a new home.
“The new fees could increase builder costs anywhere from $7,500 to $10,000 per home,” Rob Dietz, chief economist at the National Association of Home Builders told CNBC, citing estimates from US homebuilders. Last year, the NAHB estimated that every $ 1,000 increase in the median price of new home prices around 106,000 potential buyers.
So far, the biggest impact has been felt in lumber prices, “which are expected to total about $4,900 per home on average, according to Leading Builders of America, the trade group that represents most of the nation’s publicly traded home builders,” the website shared.
While the United States produces some lumber, about one-third of all lumber purchased for home construction comes from Canada. Domestic timber producers generally raise their prices to match import prices.
Rising lumber prices hurt the entire home construction industry, and a lack of certainty adds complexity to the home building process, Steve Martinez, president of Tradewinds General Contracting in Boise, Idaho, shared with the NAHB.
“Our contracts are all fixed price – which means that from the time we bid on a project to the time we start to the time we order the materials, prices can change drastically,” explained Martinez. “But we’re trying to pre-order as much as we can.”
While rising and volatile prices impact major players like Home Depot, they are better able to mitigate and predict the impact than smaller retailers.
North American Builder’s Supply, Illinois-based Home Depot and Lowe’s rival, has filed for Chapter 11 bankruptcy protection.
The company remained open and plans to reorganize and continue its operations, according to data shared by RK Consultants on X, the former Twitter.
“North American Builders Supply, Inc., a supplier of building materials based in Yorkville, Illinois, filed for Chapter 11 protection on December 3, 2025, in the Northern District of Illinois. The company reported between $500,001 and $1 million in both assets and estimated liabilities,” according to the consulting firm.
The filing lists several trade creditors and lines of credit among its largest unsecured claims. Major unsecured creditors include Bluetape, Inc. ($503,219), Kapitus Servicing, Inc. ($149,596), and an unsecured portion of a claim from the Illinois Central Bank ($94,131).
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North American Builders Supply has reportedly filed for bankruptcy protection – a Chapter 11 filing on 3 December 2025. Source: RK Consultants
The filing appears to stem from financial problems, including claims and a lawsuit from creditor Proventure Capital LLC. Source: Trellis Law
The legal complaint shows that Proventure Capital alleged unpaid obligations from North American Builders Supply (and/or one of its officers), indicating that the bankruptcy involves creditor pressure and litigation. Source: Trellis Law
Because bankruptcy protection is Chapter 11, the company may be attempting reorganization rather than outright liquidation (at least initially). Sources: RK Consultants, Pacer Monitor
The bankruptcy was also reported by the Daily Distressed Asset Central, which provided a case number, 25-18572, in the Northern Illinois Bankruptcy Court. That report shows that the Chapter 11 filing was voluntary.
The large home improvement and builder supply chain have more ability to mitigate tariffs than their smaller rivals.
In his third quarter earnings call, Home Depot Executive Vice President of Merchandising William Bastek commented on the fees.
“More than 50% of our inventory is non-tariff and obviously domestically sourced. So we’ll continue to see that and look ahead to Q4,” he shared.
In some cases, Home Depot may simply mitigate fee-related price increases by not offering as many discounts.
“If you think about our work, which is to help impact some of the tariff pressure, being a little less promotional in a couple of those garden areas was just the nature of what we did in Q2. And so again, 4 of those 5 categories that we saw an impact from were related to some of the garden projects with a lower ticket,” he shared during the chain’s second quarter call.
Lowe’s CFO Brandon Sink talked about how the tariffs have impacted his company’s inventory.
“Inventory ended Q3 at $17.2 billion, a decrease of approximately $400 million compared to the prior year. This net decrease also reflects the inclusion of inventory from recent acquisitions of approximately $600 million and higher fees,” he shared during Lowe’s third quarter earnings call.
He noted that this is a moving problem in the target that the company is monitoring.
“We continue to look at the tariffs, those ramp up here in Q3, we’re expecting them to also continue to increase in Q4, and the wrap that affects the first half of the year. So we’ll manage through that and try to understand how that affects both the sales margin and the operating margin going forward,” he added.
“Canadian lumber was up 14.5%. Concrete prices jumped 8%. Home appliances were expected to rise 20%. Suddenly, the question wasn’t how to build affordably — it was whether starter homes could be built profitably at all,” shared Cotality/CoreLogic.
“But without new housing supply, existing house prices will only continue to rise, pushing affordability further away.”
As someone currently building a new home in Florida, there is risk for both the builder and the buyer. When you sign a contract to build a new home, you lock in the price.
If the material costs decrease, the builder makes more money, and you are overpaid. If they rise, the builder risks losing money, which means that in volatile times, builders usually add an extra margin, which pushes up the costs for those buying a house.
“Already, the average cost of new construction in the United States is $422,000. Adding potential material cost increases from tariffs adds between $17,000 and $22,000 to that price tag,” Cotality data showed.
Related: Lowe’s announces free offer for customers amid struggles
This story was originally published by TheStreet on December 4, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.
