Housing Starts Jump in February
U.S. single-family homebuilding surged 11.4% in February as winter weather eased, with starts reaching a seasonally adjusted annual rate of 1.108 million units, according to the Commerce Department. However, rising material costs due to tariffs threaten the housing market’s fragile recovery.
Tariffs Drive Up Costs for Builders
President Donald Trump’s shifting trade policies, including a 25% tariff on Canadian lumber and 20% levies on Chinese goods, are increasing construction costs. The National Association of Home Builders estimated tariffs add approximately $9,200 per home, impacting affordability.
Housing Permits Decline Amid Uncertainty
Permits for future single-family home construction fell 0.2% to 992,000 units, signaling potential hesitancy among builders. Immigration enforcement crackdowns have also led to labor shortages, with undocumented workers comprising 23% of the construction workforce.
Economic Uncertainty Weighs on Markets
Despite mortgage rates declining from 7% earlier this year, economic uncertainty driven by tariffs and government spending cuts is keeping buyers cautious. Wall Street reacted negatively, with stocks trading lower and Treasury yields rising.
Fed Policy in Focus
The Federal Reserve is expected to hold interest rates steady at its upcoming meeting, evaluating the impact of tariffs on inflation. Import prices increased 0.4% in February, raising concerns about further price pressures.
Manufacturing Sees Temporary Boost
Factory output rose 0.9% in February, surpassing expectations. However, economists warn that businesses may be front-loading production ahead of tariffs, creating uncertainty for long-term growth.
