U.S. Homebuilding Faces Uncertain Future Amid Tariff Threats

U.S. single-family homebuilding sees a rebound, but threats loom due to potential tariffs and labor shortages. Challenges persist as economic conditions and policy changes under President-elect Trump could affect growth. Housing starts have increased, yet concerns over rising lumber prices and a declining workforce remain significant.

November witnessed a rebound in U.S. single-family homebuilding as the impact of hurricanes lessened, yet the prospect of tariffs and labor shortages poses a threat to new construction activities next year. The Commerce Department's latest data indicate a modest rise in permits for future homes, suggesting the sector may continue to deter economic growth in the fourth quarter, pressured by high mortgage rates despite the Federal Reserve's rate cuts.

Economists express concerns over the potential impact of President-elect Trump's policies on trade and immigration. Bradley Saunders, a North America economist at Capital Economics, stated that the expected tariffs and deportations could hamper homebuilders' supply capabilities. The rate of single-family housing starts saw a 6.4% increase to an annual rate of 1.011 million units, the Census Bureau reported.

The outlook remains dim despite improvements, as economists warned of potential surges in lumber costs and labor shortages. The U.S. imports significant quantities of lumber from Canada, and Trump's proposed 25% import tariff could lead to increased prices. Furthermore, the housing market faces regulatory challenges at state and local levels, according to Nancy Vanden Houten from Oxford Economics.

(With inputs from agencies.)