:max_bytes(150000):strip_icc()/GettyImages-1435449573-f993963d182749638127c9a405e15db9.jpg "Thinking About Renovating Your Home? It May Cost More Now")
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KEY TAKEAWAYS
- President Donald Trump has implemented tariffs on many of the U.S.’s biggest trading partners and several individual tariffs on materials used for home renovations.
- Most home contractors said they are raising prices to keep up with tariff-related price increases.
- Fewer homeowners have started extensive renovations that require loans because of high interest rates. The Federal Reserve has kept borrowing costs high as it waits to see how tariffs will affect prices.
Home renovations and remodels will likely be more expensive as contractors increase what they charge to keep up with tariffs.
In a recent survey of home contractors, including HVAC, electrical, plumbing, and roofing contractors, seven in ten said tariffs are crippling their business. Nearly 60% said they had to raise prices to compensate for tariff-related increases in home building and repair costs, according to JW Surety Bonds, a provider of bonds for contractors and construction companies.
President Donald Trump’s “reciprocal” tariffs on some of the U.S.’s biggest trading partners took effect in early August. Imports coming into the U.S. are subject to duties of 10% to 50% depending on what country they’re from.
Even before that, Trump placed a 50% tariff on all foreign steel, aluminum, and copper imports. These items are typically used in home renovations for appliances, electrical wiring, and plumbing, among other things.
The Trump administration also recently announced a combined 35% tariff on softwood lumber from Canada. The U.S. gets almost a quarter of its softwood lumber from Canada, according to Fastmarkets, a price and market analysis agency.
“Announced tariffs in recent months have resulted in material increases across a few different goods, specifically certain metal products and equipment,” Jesse Wade, an economist for the National Association of Home Builders, wrote in a blog post.
In July, wholesale building materials, typically bought by retailers and contractors, increased by 3.5% over the past year, as tracked by the Personal Price Index. Retail building materials, which are generally purchased by homeowners doing work themselves, increased in July by 6.2% compared to the same time last year.
Additionally, officials at the home-renovation store Home Depot said homeowners have been hesitant to start expensive home improvements that require a loan because of high borrowing costs. The Federal Reserve has kept interest rates high as it waits to see how tariffs will affect the economy. However, a weakening labor market increases the possibility of an interest rate cut at the Fed’s next meeting in September.
