How Lumber Tariffs Could Push U.S. Home Prices Even Higher in 2025

The cost of building homes in the U.S. could be on the rise again and lumber is at the center of the storm.

After a turbulent few years of price swings, lumber is once again causing headaches for builders, developers, and ultimately homebuyers. Softwood lumber prices jumped 23% year-over-year in April 2025, according to the National Association of Home Builders (NAHB). And with new tariffs potentially on the horizon, the housing affordability crisis could be about to get worse.

Why Lumber Prices Matter

Lumber is one of the most important raw materials in home construction especially for single-family homes and low-rise apartment buildings. It’s used in everything from framing and roofing to flooring and finishes. For many builders, lumber alone makes up 15% to 20% of total construction costs.

When prices spike, builders either have to pass those costs onto buyers raising home prices or absorb the hit, which can delay or cancel new projects altogether.

Steve Martinez, who runs a construction company in Idaho, put it plainly: “When you don’t know what lumber will cost next month, it’s nearly impossible to plan a project or stick to a budget.”

What’s Causing the Price Spike?

Several factors are pushing lumber prices higher:

• Supply Disruptions: A wave of sawmill closures across the U.S. and Canada has squeezed supply. Labor shortages and aging forests are also slowing production.
• Tariff Threats: Currently, the U.S. imposes a 14.5% tariff on softwood lumber imported from Canada. But that could rise to 34.5% later this year if a Department of Commerce review leads to stricter trade penalties.
• Rising Demand: Even as supply tightens, demand for new homes and renovations continues to grow. Americans are still looking to buy, and builders are struggling to keep up.

While Canadian lumber was spared in the most recent round of U.S. tariffs, the White House is clearly signaling interest in more trade restrictions. An executive order issued in March directed the Department of Commerce to review the national security implications of relying so heavily on Canadian imports Canada supplies 85% of all U.S. softwood lumber imports.

Builders Feel the Squeeze

The uncertainty surrounding lumber prices is already affecting homebuilders like Lennar, D.R. Horton, and Toll Brothers. All three companies have seen their stock prices dip this spring as investors worry about rising input costs and slower growth.

And it’s not just about new homes. Higher lumber prices are also driving up costs for home renovations, fences, and wood interiors. Even with a small uptick in U.S. lumber production last year, overall supply hasn’t kept up with demand.

The Bigger Picture: Affordability Crisis

Right now, nearly 100 million households in the U.S. can’t afford the median-priced home, which is hovering around $460,000. If lumber costs keep climbing, that number could get worse.

The NAHB warns that higher tariffs and volatile supply could further delay new housing projects, especially in the affordable segment of the market. Fewer homes on the market means more competition and even higher prices putting homeownership out of reach for millions.

What Comes Next?

The U.S. Department of Commerce is expected to make a final decision on Canadian lumber duties by August. If duties increase significantly, the ripple effects could be felt throughout the housing market for years to come.

In the meantime, builders, investors, and homebuyers alike are bracing for another potential round of material price volatility one that could make the American dream of homeownership even harder to achieve.

✅ Takeaway:

Lumber might not grab as many headlines as interest rates or inflation, but it’s a crucial piece of the housing puzzle. If costs continue to climb, expect higher home prices, slower construction, and deeper affordability challenges nationwide.