Commodity price volatility hits homebuilders as tariffs reshape costs

"The single most significant factor driving Q4 2025 commodity prices was aggressive tariff implementation: Steel: 50% tariffs (implemented June 2025) Aluminum: 50% tariffs (implemented June 2025) Copper: 50% tariffs on products/components (August 2025) Lumber: 35.2% total on Canadian imports (potentially rising to 45%) Cement/Concrete: 25% on Canadian/Mexican imports An AGC-NCCER survey found that 43% of general contractors reported at least one project canceled, postponed or scaled back in the past six months due to higher material costs driven by these tariffs."

"Some commodities are declining in price, while others are rising more slowly. Most commodities shown in this report declined in the latter part of the quarter, suggesting a trend that may persist through the first half of 2026. Reduced lumber supply due to selective mill closures is pushing prices high enough to keep other mills open. If the renewed home sales pace does not pick up soon, we expect further curtailments at lumber mills."

"Metals such as steel, aluminum, and copper are surging due to data center construction and electric-vehicle demand. However, aluminum and copper wire are trending lower, underscoring that raw metals and finished goods often follow different pricing trends because of distinct supply-and-demand dynamics. Steel producers, including Nucor, CMC, and Hybar, are adding more than 1.5 million short tons of rebar capacity in 2026, which will temper some price growth despite tariff pressures."

Aggressive mid-2025 tariffs—50% on steel and aluminum, 50% on certain copper products, 35.2% (potentially 45%) on Canadian lumber, and 25% on cement/concrete from Canada and Mexico—have sharply raised building material costs and prompted project cancellations, postponements, or scale-backs for many contractors. Commodity price behavior is mixed: several commodities fell late in the quarter while metals surged from data center and electric vehicle demand. Lumber supply constraints from selective mill closures keep prices elevated. New rebar capacity coming online in 2026 should moderate some steel price pressure. Wire, cement, and readymix prices remain sensitive to housing-market dynamics.

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