Tariffs appear to have impacted new residential home construction as permits fell by 4.7% month-over-month and 3.2% year-over-year during April. Starts were up 1.6% from March but were 1.7% below April 2024 levels, according to a new home construction report from Realtor.com.
Completions took the biggest hit in April, dropping 5.9% month-over-month and 12.3% year-over-year. However, Realtor.com attributed this less to tariffs, which typically would affect forward-looking metrics, and more to a longer-term trend of completions trailing permits and starts that has left fewer homes in the final stages of construction than usual.
Like many retailers, home builders have been stockpiling materials in advance of tariffs being implemented, which may explain why housing starts were less affected than permits, said Realtor.com.
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The report suggested that current trade policies could worsen a four-million-home supply gap that has emerged over decades of underbuilding. In all, there were 1.4 million starts in April, including 420,000 multifamily starts and 927,000 single-family starts.
“Single-family home construction was hit harder than multifamily, likely because rising costs of construction due to tariffs compressing profit margins, and bigger projects have more room for error,” said Realtor.com. “This could also be in response to market conditions.”
Rents have been falling year-over-year for 21 months nationwide, which might be causing builders to anticipate being able to pass along tariff costs more easily to renters than single-family home buyers. Multifamily permits grew by 2.6% year-over-year, and starts grew by 28.8% while completions fell by just 1.7%. Meanwhile, single-family permits fell by 6.2%, starts plunged by 28% and completions tumbled by 16.6%.
The South seems to be the region experiencing the most significant pullback on permits directly related to tariffs. Permitting there fell by 9.6% month-over-month and 9.8% year-over-year. Realtor.com said the percentage difference in price between newly built and existing homes is lower in the South, which suggests builders are responding to increased costs by deprioritizing lower-margin projects.
Duplexes and townhomes housing between two and four families were a bright spot for permitting. The category was up 1.7% month-over-month and 5.4% year-over-year.
“We know that builders are trying to build smaller and more affordable inventory to supply some missing price ranges of inventory, and though they’re starting to eschew some lower-priced single-family homes, they are at least able to continue prioritizing this important segment,” said the report.
Realtor.com noted that tariffs also impact the housing market by deterring buyers who are anxious about job loss and personal financial situations.
“What we’re seeing now are the more concrete supply-side effects: fewer and less affordable newly built homes under construction,” said the report. “The cost of owning a home and the income required to do so have skyrocketed since the COVID-19 pandemic, and tariffs will continue to put this part of the American dream even further out of reach for millions.”
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
