Tariffs aren’t likely to make homebuilding in the U.S. or the Wilmington area grind to a halt, officials say. But they do equate to an increased building cost that will be passed to the homebuyer, said Danushka Nanayakkara, assistant vice president of forecasting and analysis for the National Association of Home Builders.

That increase, the NAHB estimates, could be $7,500 to $10,000 per home, she said.

During the 2025 Housing & Construction Forecast hosted by the Wilmington-Cape Fear Home Builders Association and the Cape Fear Realtors on March 27, Nanayakkara discussed tariffs as part of an overall presentation about economic factors that are affecting and will continue to impact the residential real estate market.

In addition to an NAHB expert, also presenting were Jessica Lautz, deputy chief economist and vice president of research for the National Association of Realtors, and Mouhcine Guettabi, regional economist and associate professor of economics at the University of North Carolina Wilmington.

Just for residential construction, the U.S. spends $11.2 billion on imports, Nanayakkara told the audience of real estate industry professionals at The Terraces at Sir Tyler in Wilmington.

“China makes up the majority at 22.6% of the share. Mexico’s share is over 13%,” Nanayakkara said. “This is important because 70% of our gypsum drywall comes from Mexico, and Canada makes up 8.7% (overall) … 85% of our soft-wood lumber comes from Canada.”

For Taiwan and Vietnam, “the shares have increased for these two particular countries in the last few years because in 2016 when the Trump administration put in tariffs for China, they rerouted some of their trade through Vietnam and Taiwan.”

President Donald Trump had placed 20% tariffs on all Chinese imports as of March this year, but as of press time, he planned to unveil “reciprocal” tariffs “designed to address trade imbalances” on April 2, according to a Reuters article.

While the consumer price index is often in the news, the PPI (producer price index) measures what building material costs have looked like. The index shows that over the past four years, the price of building materials overall has increased 34%, Nanayakkara said.

The biggest specific increase is the 71% for power transfer stations in the past few years.

“We hear from builders saying that they have basically entire communities built … but no one can move in because there’s no power,” Nanayakkara said.

Economists understand the argument, she said, for tariffs: They can spur an increase in domestic production of supplies builders need. But it takes a long time to open, for example, sawmill factories. “It is way easier said than done,” she said.

But tariffs aren’t the only challenge builders continue to face.

“During the 2008 recession, we lost about a million workers” from the construction industry, Nanayakkara said. “We never really recovered from that.”

Currently, there are close to 250,000 open construction jobs, she said. New mass deportations could also have an impact because immigrant labor makes up 30% of the construction labor force.

Nanayakkara pointed out that the NAHB has proposed solutions to these and other issues impacting their members and the industry.

One of the association’s recommendations in its 10-point plan is to eliminate excessive regulations. Nanayakkara said the cost of regulations at the local, state and federal level (in general, not just in the Wilmington area) per single-family home amounts to $94,000.

Other items on the NAHB list include promoting careers in the skilled trades; passing federal tax legislation to expand the production of affordable and attainable housing; and reducing local impact fees and other upfront taxes associated with housing construction.

As homebuilders face these and other challenges, demand remains sky-high.

Nanayakkara told the Wilmington audience that in talks with lawmakers, they should “bring up these issues because we desperately need housing everywhere. … We need all sorts of housing, not just single-family detached houses. We need townhouses. We need missing middle housing. We need apartments.”