The second half of 2025 brings challenges for American homebuilders because interest rates remain elevated while material prices continue to rise and policy restrictions from tariffs and immigration enforcement affect the housing market outlook.
The spring selling season in 2025 showed its worst performance since 2019 according to Evercore ISI survey results. The builders reported sales as ”slow” through 71% of their responses because their attempts to boost demand with mortgage rate buydowns and smaller home options failed to produce results.
The construction industry faces increased expenses because of inflationary pressures from the pandemic and Trump administration tariffs. The real estate firm Engel & Völkers predicts that steel and aluminum and copper materials will experience price increases between 4% and 10% based on geographic location.
The proposed mass deportation plan of Trump has created industry-wide concerns because immigrant workers form a vital part of this labor-intensive sector.
Major builders D.R. Horton, PulteGroup and NVR have not shown tariff-related impacts yet but analysts predict these effects will become apparent during the upcoming months. The construction industry shows signs of decline because single-family housing starts reached their lowest point in 11 months and permits reached their lowest level since March 2023.
The current economic uncertainty together with tariff-driven inflation has kept mortgage rates above 6.7%. Builders expect to receive weak financial reports from their operations during the upcoming earnings announcements this month.
