The U.S. housing market is once again facing headwinds as volatile lumber prices create uncertainty for builders and potential homebuyers. Rising costs threaten to worsen the existing affordability crisis, making it even more arduous for Americans to purchase homes.

According to the National Association of Home builders, softwood lumber prices jumped 23% year-over-year in April. Futures also experienced a sharp increase earlier in 2025, fueled by concerns about increased U.S.duties and widespread sawmill closures across North America.

Major homebuilders like Lennar, D.R. Horton and toll Brothers have felt the impact, with their stocks slumping this spring.

While lumber was not included in the most recent round of tariffs, the Trump administration has indicated a desire to tighten trade restrictions. In March, the White House issued an executive order directing the Commerce Department to investigate the national security implications of lumber imports and explore ways to boost domestic production.

Currently, the U.S. imposes a 14.5% duty on Canadian lumber. The National association of Home Builders reports that Canada accounts for approximately 85% of all U.S. softwood lumber imports, representing almost a quarter of the U.S. supply.

Following a regulatory review by the Department of Commerce,that tariff rate could increase to 34.5% later this year, further disrupting a sector already struggling with material costs and labor shortages.

Impact on Construction and Home Prices

“The unpredictability of lumber prices adds serious complexity to planning and budgeting,”

According to HomeGuide, wood frames are critical in high-end multifamily homes, accounting for up to 18% of construction costs. Steve Martinez, president of Idaho-based Tradewinds General Contracting, notes that lumber price volatility complicates financial planning.

Beyond new home construction,higher lumber costs are also affecting renovations,fencing projects,and interior work. While the United States Forest Products annual market review found that U.S. lumber production increased to 64 million cubic meters in 2023, nearly 1% higher than the previous year, demand continues to exceed supply. environmental regulations, aging forests, and labor constraints contribute to this imbalance.

The National Association of Home Builders estimates that nearly 100 million U.S.households cannot afford a median-priced home, which now averages $460,000. experts warn that rising tariffs and ongoing supply instability could further hinder new development as affordability declines.

The Department of Commerce is expected to make a final decision regarding Canadian lumber duties by August.