Impact of Trump's Executive Orders on Homebuilders

After taking office, President Donald Trump promptly signed multiple executive orders that may significantly influence the homebuilding sector. These actions include a mix of measures addressing various issues, from health to immigration, and have sparked conversations about their implications for builders.

One notable executive order aims to prioritize housing in America. The National Association of Homebuilders (NAHB) has expressed support, stating, "NAHB commends President Trump for acting on day one to make housing a national priority by issuing an executive order that seeks to lower costs and increase supply." The NAHB emphasizes the urgency in addressing the current housing affordability crisis, highlighting the need to remove regulations that inflate housing costs and hinder builders from creating affordable housing.

However, analysts note that the full impact of these orders on homebuilders is uncertain and can be conflicting. For instance, builders are grappling with high-interest rates, which complicate their finances further amid a delicate labor and materials market. Bright MLS Chief Economist Lisa Sturtevant mentioned, "It's more expensive to borrow, find workers, and source materials, making house construction pricier for buyers."

Questions Surrounding the Housing Executive Order

Despite the NAHB's applause, the exact measures in Trump's housing executive order remain vague. Much of the order reiterates his critique of the previous administration's policies, calling them oppressive. Although it suggests reducing regulations, local zoning laws—managed by municipalities—pose a significant hurdle, making the federal influence limited.

Federal policies may encourage local governments to adapt their zoning laws through grants and transportation funding. Yet, some towns may prefer to maintain their zoning status and reject federal financial assistance. Chen Zhao, an economist at Redfin, stated, "It's unclear what impact these federal orders will have, as the authority over zoning rests locally."

Potential Labor Shortages from Immigration Orders

Trump's immigration executive orders primarily focus on border security and do not directly target builders. However, if strict immigration enforcement leads to mass deportations, the construction labor force could be impacted significantly. The NAHB estimates that about 32.5% of construction workers are immigrants, with many specific trades relying even more heavily on immigrant labor.

If labor becomes scarce, it could tighten supply in the construction sector. Sturtevant observed, "The difficulty in recruiting workers could harm the housing market in the long run due to the reluctance to expand immigration opportunities for construction jobs." While the exact impact may vary based on the locations targeted by enforcement, urban areas with significant construction projects may feel the strain more acutely.

Concerns Over Tariffs on Building Materials

Trump's threats regarding tariffs on countries like Canada, Mexico, and China could also present challenges for homebuilders. An NAHB study from 2018 estimated that tariffs on Canadian lumber alone raised the cost of building a single-family home by $9,000. Sturtevant highlighted the concern that higher material costs will directly hinder builders' ability to manage pricing effectively.

Builders welcomed some of Trump's proposals, perceiving them as negotiation tactics; for example, his suggestion of a 25% tariff includes a timeline that may prove flexible. While a study on trade with China was proposed, homebuilders are wary of immediate material cost increases from current tariffs, especially given that approximately 30% of the soft lumber used in U.S. construction comes from Canada.

The long-term outcome of these tariffs may lead to a boost in domestic consumption of construction materials, yet the short-term effects translate to higher costs for building projects, impacting both builders and customers.

Trump, Homebuilders, Executive