How lumber duties could worsen home affordability in the U.S.
Volatile lumber prices are once again rattling the U.S. housing market, squeezing builders and threatening to exacerbate an already dire affordability crisis.
Softwood lumber prices in April surged 23% year-over-year, while futures rose sharply in early 2025 amid fears of increased U.S. duties and widespread sawmill closures across North America, according to the National Association of Home Builders.
This has weighed heavily on major homebuilders such as Lennar, D.R. Horton and Toll Brothers, which have all seen their stocks slump this spring.
Though lumber avoided inclusion in the latest round of tariffs, the Trump administration has signaled growing interest in tightening 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 boost domestic production.
The U.S. currently imposes a 14.5% duty on Canadian lumber, and Canada accounts for about 85% of all U.S. softwood lumber imports, representing almost a quarter of U.S. supply, according to NAHB.
That tariff rate could jump to 34.5% later this year following a regulatory review by the Department of Commerce, further disrupting a sector already reeling from material costs and labor shortages.
"The unpredictability of lumber prices adds serious complexity to planning and budgeting," said Steve Martinez, president of Idaho-based Tradewinds General Contracting. His business builds high-end multifamily homes, where wood frames are critical, accounting for up to 18% of construction costs, according to HomeGuide.
Beyond homebuilding, higher lumber costs are hitting renovations, fencing and interiors. The United States Forest Products annual market review and prospects found that U.S. lumber production inched up to 64 million cubic meters in 2023, up nearly 1% from the year prior. But demand continues to outpace supply. Environmental regulations, aging forests and labor constraints compound the challenge.
Nearly 100 million U.S. households can't afford a median-priced home, which now averages $460,000, according to NAHB. As affordability worsens, experts warn that higher tariffs and ongoing supply instability could stall new development for years.
The Department of Commerce is expected to reach a final decision on Canadian lumber duties by August.
Watch the video to find out more about the trade tension between the U.S. and Canada and what's behind the rise in lumber prices.
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