Housing affordability problems go deeper than tariffs

MINNESOTA, USA — When you look at a new home being built, it’s easy to see the significant amount of lumber that is required to build a home. 

However, you may not notice the metal that goes into a home, like steel and aluminum, which may cost more due to recently enacted tariffs.

“Your nails, your screws, your HVAC duct work, the appliances, your garage door. All of that will be impacted,” Housing First Minnesota Senior Director of Housing Policy Nick Erickson said.

Erickson said it’s difficult to put an exact number on how much prices for new homes could increase with new tariffs in effect.

The National Association of Home Builders (NAHB) estimates that around 7% of the building material for a new home is produced overseas.

The NAHB projects that tariffs overall could increase the price of a new home by around $10,900.

“But it’s not just tariffs. We’ve seen affordability erode over the last five or six years,” Erickson said.

Besides tariffs, Erickson says building codes, zoning requirements, and permitting policies have also increased the cost of construction.

These factors have led to fewer home construction projects in recent years.

Housing First Minnesota says the numbers have been trending downward for several years, but in recent months, the numbers were showing signs of improvement until this summer.

Earlier this month, Housing First Minnesota released a report that showed an 11% reduction in homebuilding permits in May compared to a year ago.

Multifamily construction permits were also down, with just 22 units recorded in May, which is also down 5% compared to 2024.

“This is a time where we need to be producing more homes, not fewer,” Erickson said.

Housing First Minnesota estimates the Twin Cities metro needs around 75,000 new homes to meet the needs of consumers and the housing market.

The ongoing shortage of homes has led to higher prices for homes, which is pricing a lot of consumers out of the local market.

“The number one thing is state and local and federal government has to start realizing that their policies are having an adverse effect on the cost of housing,” said Erickson.

So, yes, home building associations believe tariffs could increase the cost of building a new home, but the issue of affordability goes much deeper than just tariffs.