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Investing.com -- The latest round of Trump-era tariffs, set to take effect on August 1, could raise the cost of building an average single-family home in the U.S. by approximately $6,800, according to UBS analysts.
The bank revised its prior estimate of $8,200 per home to reflect newly announced reciprocal tariff rates and a 50% duty on imported copper.
UBS now estimates that reciprocal tariffs could contribute around $6,270 to the total, while copper tariffs may add another $553 per home.
The analysis assumes that imported materials represent about 7% of the $103,800 in materials used per house and face an average incremental tariff of 20%.
“We also incorporate a ~5% knock-on price increase for domestically sourced products,” analysts led by John Lovallo said in a note.
A separate risk stems from Canadian lumber. The analysts note the possibility that tariffs could rise from 14.5% to 34.5%, adding an additional ~$1,038 per home if implemented.
Despite the projected increase in costs, UBS believes the impact will be shared across the supply chain heading into 2026, rather than fully absorbed by homebuilders.
Public builders may be able to mitigate some pressure due to scale advantages. “Top 16 public builders controlled ~47% share as of 4Q24 vs ~25% in 4Q13,” the analysts highlighted.
Some builders have also reported improved cost trends. As Meritage (NYSE:MTH) CFO Hilla Sferruzza commented during the company’s Q2 earnings call, “tariffs have not really flown through our numbers in any material way.”
“We’ve been able to successfully push back on any tariff asks… at this point in time, we’re not modeling any expectation for increases in our direct. We actually think that there’s potential savings.”
While the ultimate cost impact remains fluid, UBS expects builder cost management efforts and efficiencies to support gross margins through 2026.