It was a quiet Wednesday morning when Mark, a mid-sized residential developer in Arizona, found himself staring at an invoice with disbelief. The cost of imported lumber had jumped—again. It was the fourth increase in as many months, and this time it wasn't just inflation. It was tariffs, he was told. The numbers didn’t lie: building the same three-bedroom single-family home he’d completed for $270,000 last spring now teetered closer to $310,000. Margins were vanishing, but the buyers weren’t coming in any faster. He sipped his burnt coffee and let out a slow sigh. “It’s getting harder to make it work,” he muttered to himself.
Mark’s story isn’t unique. Across the country, builders—big and small—are grappling with the fallout from a whirlwind of economic pressures. April’s data painted a sobering picture: single-family home construction dipped by 2.1% compared to March, down 12% from the same time last year. The numbers, released by the U.S. Census Bureau, speak to a broader uncertainty that has crept into the homebuilding industry like a cold draft through an unfinished window frame.
The ripple effect began months ago, when tariffs began to hit key construction imports. Initially, it was brushed off by some as a temporary political volley, but for those like Mark who need steel nails, copper wiring, or engineered wood, it became clear that the costs weren't just rising—they were shifting the math entirely. Over 78% of homebuilders, in a recent survey, admitted they were struggling to price their homes because of the unpredictable costs. The sense of control, of having a solid grasp on budgeting, was slipping away.
Buddy Hughes, the president of the National Association of Home Builders, tried to put it gently, but the truth was stark. Builders were pulling back not out of choice but out of necessity. Rising interest rates and uncertain trade policy had collided with long-standing cost issues—labor, land, and materials—to create the perfect storm. “Housing affordability,” Hughes explained, “has never been more fragile.”
Then came the so-called “Liberation Day” tariffs rolled out by President Trump in early April. They were meant to be symbolic, even strategic, but the market read them quite literally. Within days, they were revised, paused, restarted—policy whiplash that sent procurement teams into chaos. A roll of insulation ordered on Monday could cost significantly more by Friday. Builders started pausing projects, waiting for clarity that never quite arrived.
Joel Berner, a senior economist with Realtor.com, likened the April slowdown to the first crack in a windshield: small, but destined to spread. “Trade wars,” he said, “have real-world consequences. And in real estate, those consequences hit supply, sentiment, and buyer confidence all at once.”
For a young couple in Tennessee looking to buy their first home, the trickle-down is tangible. Prices have ticked upward again, and homes that fit their budget are getting rarer. Fewer builders are breaking ground. Permits for new single-family homes dropped over 5% in April. And while some builders offer discounts, it's not enough to make a significant dent for buyers relying on tight FHA limits or modest down payments.
In cities like Austin and Phoenix, the construction cranes haven't vanished, but they’ve definitely slowed their swing. Multifamily housing—apartment complexes and mixed-use buildings—saw a small uptick in April, rising 11% from March and a notable 31% year-over-year. This came as a small piece of good news. After all, the U.S. still faces a housing shortage estimated at nearly 4 million units. But that growth in multifamily development may be less about optimism and more about necessity.
Builders are increasingly favoring larger, more cost-efficient projects that are less sensitive to raw material price swings. An apartment complex, for example, spreads the impact of increased costs across dozens or hundreds of units. And with homeownership slipping further out of reach for many, more Americans are choosing—or being forced—to rent longer. That trend makes multifamily units a more stable bet.
In the Northeast, something curious happened in April. Single-family housing starts spiked—up 14% from March and 18% from the year before. But before anyone could call it a comeback, it became clear this wasn’t a nationwide phenomenon. The region represents a relatively small slice of the national construction pie. Meanwhile, in the West, the drop was alarming: a 19% fall from March, down 15% year over year. It’s a tale of two markets—where growth or contraction seems as tied to local policy and migration trends as to any macroeconomic lever.
In the South and Midwest, things were steadier, but still lackluster. Builders there are testing new strategies, such as constructing more duplexes and smaller footprint homes to offer buyers a more affordable entry point. The permits data shows a glimmer of hope in the “missing middle” of housing: two-to-four-unit buildings like townhomes or garden-style flats are seeing a quiet renaissance. These projects don’t grab headlines, but they offer something the market desperately needs—attainability.
Berner believes this is more than a shift in construction tactics—it’s a philosophical pivot. “Builders are beginning to prioritize need over margin,” he said. “There’s recognition that what’s been missing in the market are homes at attainable price points. But they’re also realizing that building those homes in today’s environment is no easy task.”
Back in Arizona, Mark has decided to halt two upcoming projects. He’s pivoting toward a 16-unit townhome build on a smaller lot with shared amenities, solar panels, and streamlined designs. It’s not the American Dream his clients used to ask for, but it’s close enough—and it might actually get built.
Meanwhile, national builder confidence remains fragile. According to the May housing market index released by the National Association of Home Builders and Wells Fargo, more builders are discounting—34% offered price reductions in May, up from 29% in April. The average markdown? Around 5%. Builders are also increasingly using incentives like closing cost assistance or upgrades to woo hesitant buyers. These promotional tools were once the domain of slow markets, but now, they’re standard operating procedure.
And still, demand is soft. Spring, typically the hottest time of year for real estate, has felt more like late autumn—cool, quiet, and full of uncertainty. The interest rates are biting, the headlines are daunting, and many prospective buyers are simply waiting. Waiting for rates to fall, waiting for prices to ease, waiting for confidence to return.
But time, as Mark and others know too well, is a luxury builders can’t afford to waste.