Stocks in homebuilders plummet on worries Trump Tariffs will raise prices


Under construction buildings are seen with people on the roof of a building.

Paul Bersebach/ MediaNews Group/ Orange County Register/ Getty Images

The Key Takeaways

  • The shares of builders and contractors fell Monday amid fears new tariffs may increase construction costs. 
  • President Donald Trump signed executive orders over the weekend calling for 25% tariffs on Canada and Mexico, and 10% tariffs on China.
  • Trump had agreed Monday to put off the implementation of tariffs against Canada and Mexico by about a week.
  • National Association of Home Builders (NAHB) said that tariffs on products like Canadian wood could lead to higher home prices.

The shares of a number of homebuilders, construction firms and other companies have fallen on Monday amid fears that new tariffs may increase the cost to build. 

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. Trump delayed the tariffs until around a month. The tariffs had been set to take effect on Tuesday.

NAHB: Tariffs could raise homebuyer prices as building costs rise.

Carl Harris, the chair of the National Association of Home Builders, said that this move may increase home prices as builders’ costs go up. About 70% of softwood lumber imported to the U.S. is from Canada, and about 30% of gypsum.

“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.

LEN, SHI, BLDR, TOL, PHM

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LeadZevs (John Lesley) is an experienced trader specializing in technical analysis and forecasting of the cryptocurrency market. He has over 10 years of experience with a wide range of markets and assets - currencies, indices and commodities.John is the author of popular topics on major forums with millions of views and works as both an analyst and a professional trader for both clients and himself.

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