CNN
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US homebuilders pulled back on projects in April amid whipsaw tariff announcements and growing fears of economic stress, new data on Friday revealed.
Single-family home starts dropped 12% in April compared to one year ago, on a seasonally adjusted basis, according to data from the US Census Bureau and the Department of Housing and Urban Development. Housing starts measure the number of new residential construction projects that have broken ground and construction that has started.
Single-family permits issued for new construction, a key indicator of future home construction, also fell 5.1% from March and were down 6.2% compared to April of last year.
The drop in new home construction comes at a time when home affordability is near generational lows amid persistently elevated mortgage rates and a shortage of homes for sale. A prolonged stall in home construction could magnify home shortages and affordability issues, economists warn.
“Political uncertainty in Washington is making homebuilders cautious and they are sensing that the public sees this is not the best time to be in the market for a new home unless you’re desperate,” Chris Rupkey, chief economist at financial markets research company FWDBonds, wrote in a note to investors Friday. “Trade tariff uncertainty is disrupting the housing market… The only certainty is that this is not the time to build or buy a new home.”
Housing starts are often seen as a key indicator of the overall health and direction of the US economy. When single-family housing starts plunge, as they did in April, it could be a worrying sign.
However, recent moves by the Trump administration to ease tariffs could reinvigorate homebuilding, said Danushka Nanayakkara-Skillington, the National Association of Homebuilders’ (NAHB) assistant vice president for forecasting and analysis.
“Recent developments on the tariff front concerning the United Kingdom and China along with major tax legislation advancing in Congress should provide a boost to housing demand and positive momentum for the economy,” Nanayakkara-Skillington said in a statement on Friday.
Rising costs and skittish buyers
Builders who spoke to CNN attributed the slowdown in home building to two factors: increased material costs due to tariffs and faltering demand for new homes as home shoppers grew more hesitant amid April’s stock market gyrations and tariff-induced recession fears.
The full and final tariff rates imposed on all US imports are still unclear. In April, President Donald Trump announced tariffs on roughly 60 trading partners of up to 50%. While those tariffs are currently on pause, a baseline 10% tariff on most imports is still in place as the US works to negotiate new trade agreements. So far, one deal has been reached with the United Kingdom.
Last month, trade with China, one of America’s largest trading partners, slowed to a crawl after Trump imposed a 145% tariff on Chinese imports. That rate was temporarily lowered to 30% last Monday.
Raw material costs have already gone up due to tariffs. Approximately 7%, or $14 billion worth, of all goods used in the construction of new multifamily and single-family homes in the US were imported in 2024, the NAHB estimated.
About 60% of builders reported in April that their suppliers had already increased or planned to increase prices of materials due to tariffs, according to a survey done by the NAHB.
Not all homebuilders will be able to pass off increased raw material costs to home sellers, though, Ivy Zelman, a housing analyst and executive vice president of research firm Zelman & Associates, told CNN last month. Some smaller homebuilders may have to absorb some of the extra tariff-induced costs, which could mean even fewer homes built in the future, she said.
Tariffs have also affected home shoppers. In the weeks after Trump’s April 2 tariff announcement, Roddy MacDonald, a manager at Stonegate Builders, a homebuilder that operates in Minnesota’s Twin Cities, said he noticed a difference in the tone of prospective homebuyers.
“The biggest objection we’ve seen is people feeling uncomfortable with the uncertainty in the economy,” MacDonald said. “The desire to buy is definitely there, but I think people with a little bit of discretionary income are holding tight, and we’re seeing people that are pulling the plug on conversations (about homebuying).”
No slowing of apartment and condo construction
One relatively bright spot in April was multifamily construction, which includes apartment buildings and condos. Starts for buildings with five or more units were up more than 28% between April 2024 and April 2025, and permits were up 2%.
However, multifamily projects are often planned further in advance, with raw materials purchased well before construction. That likely means the full impact of tariffs has yet to hit the sector.
For Emily Hubbard, the co-founder of Sage Investment Group, a Washington state-based company that focuses on converting underused hotels into affordable apartment buildings, it was mostly business as usual in April. That’s because her company locked in prices for raw building materials for this year with Home Depot in late 2024 in anticipation of elevated tariffs.
“Prior to Trump’s election, we had been sourcing a lot of our materials directly from manufacturers overseas,” Hubbard said. “When he got elected, we immediately started making moves to adjust how we managed our supply chain.”
When tariffs hit last month, Sage Investment Group had one incoming flooring shipment from overseas. The company paid $40,000 extra for it.
Still, Hubbard estimates the move to lock in pricing before tariffs went into effect will ultimately save her company $3.5 million in additional tariff fees.
“We’re grateful for what that means for our projects,” Hubbard said. “We’re going to be able to deliver 2,000 units of housing this year because of it.”
