The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) was conducted just before the Trump Administration announced new tariffs on Chinese products.

Pre-tariff announcement, homebuilders’ sentiment and confidence levels were very positive, despite ongoing concerns about skilled labor shortages and rising materials costs. HMI sentiment was up to 67 from last year’s rating at 64 but down from its most recent high of 70 in May of this year. (Any score rating of 60 or more is considered good.)

Two of the three Index components, current sales conditions rose I point to 74 and component gauging expectations in the next 6 months rose 2 points to 74, were in positive territory. The buyer traffic component remained unchanged at 49, the only component in negative territory.

Then, new Chinese tariffs were announced.

The NAHB found 600 products among the 6,000 listed in these most recent tariffs that are either connected to home construction or to specific tools used in home, condominium, and apartment building. In other words, 10% or 600 items of newly listed products included tariffed products that directly relate to the business of homebuilding.

Translating the math into homebuilding dollars, 10% (600 of 6,000 goods) of $10B (6,000 goods) equals $1B. In other words, this 10% tariff rate on goods directly related to building homes puts $1B in tariffs on housing. Home appliances and other home furnishing products are included among this 600 tariffed product list.

Robert Dietz, chief economist with the NAHB, said, “Free trade is better for builders, buyers and renters. Housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs now exacerbated by escalating trade skirmishes.”