The Impact of Trump’s Executive Orders on Homebuilders

After taking office on his first day, President Donald Trump quickly began to implement his policies by signing a large number of executive orders. These actions, including ones related to immigration and tariffs, have notable consequences for homebuilders across the country.

One of the significant executive orders focuses specifically on housing. The National Association of Homebuilders (NAHB) praised Trump’s decision, stating, "NAHB commends President Trump for acting on day one to make housing a national priority by issuing an executive order that seeks to lower the cost and increase the supply of housing." They emphasize that there is a housing affordability crisis in America and that removing unnecessary regulations is essential for providing more affordable housing options.

While many of Trump’s executive orders may create complications for homebuilders in the short term, the overall effects are still uncertain. In addition to regulatory challenges, homebuilders also face a high-interest rate environment. According to Bright MLS Chief Economist Lisa Sturtevant, "It’s more expensive to borrow, find workers, and source materials, making it costlier to build homes, which ultimately raises prices for homebuyers."

Trump’s Housing Executive Order Lacks Specificity

Homebuilders support Trump’s acknowledgment that low housing supply drives up prices. However, the solutions proposed in his executive order are vague. Much of the text criticizes the previous administration’s policies. While he expresses a desire to ease building regulations, many zoning rules that affect housing construction are determined at the local level and are beyond the president's scope.

Federal interventions to change local zoning usually involve tying conditions to funding for transportation or community development. However, some local governments may reject such federal funding to maintain their current zoning rules.

As Chen Zhao, an economist at Redfin, noted, "There’s limited impact that federal agencies can exert on local governments. They can encourage streamlined regulations, but the ultimate decision rests with local authorities."

Immigration Executive Order’s Indirect Effects on Builders

Trump's executive orders also include an immigration policy focused on securing the southern border and reinforcing federal funds for constructing a border wall. While these changes may not have an immediate impact on homebuilders, they signal a crackdown on immigration that could affect labor availability.

If Trump carries through with plans for mass deportations of immigrants currently in the United States, it could significantly reduce the available construction workforce, as immigrants make up a considerable percentage of construction workers—over 32.5% according to NAHB. Certain skilled trades rely even more on immigrant labor, with more than half of the workers in plastering, drywall installation, roofing, and painting being immigrants.

Sturtevant highlighted, "There’s a persistent challenge in finding sufficient workers for the construction sector, and limiting immigration can have long-term effects on both the economy and the housing market." The impact of immigration enforcement will depend on the locations of any raids and their potential disruption of the labor supply.

The Threat of Tariffs on Building Materials

Trump’s ongoing threats to impose tariffs, particularly on Canada, Mexico, and China, could have a significant adverse effect on housing prices. Economic studies have indicated that tariffs on materials such as Canadian lumber have previously increased the costs of building homes by tens of thousands of dollars.

“It’s clear that increasing the costs of materials will make it harder for home builders and will drive up prices for homebuyers,” Sturtevant stated. On his first day, Trump proposed a 25% tariff on materials from Canada and Mexico, but analysts view this as potentially negotiable.

While Trump considered tariffs on Chinese goods, he opted for a more cautious approach by calling for a study instead. The long-term implications of such tariffs could shift domestic consumption patterns in construction materials, although short-term disruptions and price hikes seem unavoidable given the reliance on imports.

Trump, Homebuilders, Housing