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U.S. AVERAGE HOME COST GETS MORE COSTLIER AFTER LUMBER TARIFFS
President Donald's Trump latest move to slap more tariffs on imports of lumber, vanities and kitchen cabinets could further hike average U.S. homebuilding costs.
UBS Global Research, in a note dated Sept 30, estimates the potential total tariff impact on the cost to construct an average home to hit about $8,900, a whopping $1000 increase from its previous estimate.
The White House said on Monday that Trump signed a proclamation on Monday to set a 10% tariff rate on imports of lumber and 25% on vanities, kitchen cabinets and upholstered wooden products,
The proclamation said the tariff rates would start on October 14, but added that duties would increase on January 1 to 30% for upholstered wooden products and 50% for kitchen cabinets and vanities imported from countries that failed to reach an agreement with the United States.
UBS expects the hiked lumber tariff will add $720 of additional cost to an average home, with cabinets/vanities increasing cost by roughly $280 per home.
U.S. and Canadian lumber companies - including Boise Cascade BCC.N and Weyerhaeuser WY.N, Interfor Corp IFP.TO and Canfor CFP.TO have been facing challenging times due to tariffs.
"We continue to believe this cost impact will be spread throughout the entire housing value chain, with the builders perhaps best positioned to push back on suppliers," UBS added.
Housing market sentiment is not that great either. While declining mortgage rates offered a boost in August, that could be quickly overshadowed by a softening job market.
(Siddarth S)
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