Tariffs, Rates, and Uncertainty: What’s Keeping Home Buyers on the Sidelines?
We talk to a lot of builders across Canada and the United States about the upcoming tariffs. In recent months, many of our partners have shared that they’re noticing a shift—home buyers are hesitant, and urgency has waned.Â
In a world of rising costs, economic uncertainty, and shifting buyer priorities, the “build it and they will come” model isn’t holding up. The question we’re exploring is: What’s driving this lack of urgency in new home seekers? More importantly, how can builders adapt?Â
Home builders are already doing their due diligence, but when markets start to shift, the challenge isn’t seeing the change—it’s seeing it early enough to act.
Economic Uncertainty and Buyer Hesitation
The global economy is sending mixed signals, and home buyers are paying attention.
- Elevated interest rates have priced many would-be buyers out of the market. Mortgage costs remain high, making new home ownership a tougher sell.Why move from that interest rate you have today to something far more aggressive, far less appealing.
- Fears of tariffs and import taxes on materials like lumber and steel have created hesitation, with buyers concerned about the trickle-down effect on home prices.
- Uncertainty around inflation, job security, trade restrictions, and trade policies has buyers second-guessing whether now is the right time to invest in a new build.
With confidence shaken, many potential home buyers are taking a “wait and see” approach—waiting for economic conditions to stabilize before making a move.
The Impact of Tariffs on Construction Costs on the US and Canada
The financial pressure isn’t just on prospective buyers; home builders themselves are feeling the squeeze.
Expected tariffs on Canadian lumber and other critical materials like cement (key ingredient for concrete) have driven up costs in the U.S., making new builds more expensive. In Canada, potential trade restrictions on building supplies could further increase costs, leading to higher home prices. The National Association of Home Builders (NAHB) recently reported a drop in builder confidence, citing rising material costs as a key factor.
Builders anticipate that tariffs could add between $7,500 and $10,000 to the cost of constructing an average single-family home, potentially pricing thousands more families out of home ownership.
Per The Builder’s Daily, past tariff battles have shown that volatility alone can throw supply chains into chaos. Ahead of the latest measures, suppliers rushed to stockpile materials, only to hold them back, uncertain about what came next. This stop-and-go cycle amplifies price swings and extends lead times, making an already unpredictable market even harder to navigate.
Higher costs mean tighter margins, tougher pricing decisions, and ultimately, a harder sell to price-conscious buyers.
Home Buyers Want Ready-to-Go, Not Built-from-Scratch
There’s also a shift in what buyers want. In an era of uncertainty, in the last year, many started opting for existing homes over pre-construction or new builds.
Why?
- Cost Control: Rising construction prices and potential delays make new builds feel risky.
- Speed: Buyers don’t want to wait 6-12 months for a home when they can move into an existing property now.
- Flexibility: The resale market offers more negotiation power, while builders have been slower to adjust pricing in real-time.
For builders, this shift poses a challenge—and an opportunity. The key is to better predict and respond to demand in real-time to ensure projects (including costs and timelines) align with shifting buyer expectations.
How OpenHouse.ai Helps Builders Stay Ahead
In today’s uncertain market, home builders need more than just intuition—they need data-driven insights that translate into higher profitability, faster sales, and smarter decision-making. That’s where OpenHouse.ai comes in.
Sales forecasting with AI—Now you can Rely on Both your Sales Teams and a Non-biased PerspectiveÂ
Know exactly where demand is moving—90 days before it happens. OpenPredict gives builders the power to anticipate shifts in the market with 95% accuracy, helping you increase profit per home and reduce risk in volatile conditions.
Optimize Pricing and Conversion Strategies
Focusing on the right home buyers at the right time is key. OpenConnect prioritizes high-intent leads, increasing conversion rates by as much as 7% and reducing reliance on buyer realtors by as much as 5%, all while boosting sales velocity.
Improve Cycle Time
Using AI to predict where bottlenecks will happen before they disrupt operations, OpenHouse.ai works with builders to improve cycle time. By analyzing the full home building process for each builder—including pre-construction—our AI-powered platform OpenPredict can begin to forecast where delays will occur weeks or months in advance. That means builders can adjust scheduling, balance workloads, and make more informed decisions to keep things moving.
The Bottom Line
Yes, buyer urgency has slowed—but that doesn’t mean builders have to be caught flat-footed. By leveraging what we like to call quantitative AI, home builders can stay ahead of shifting demand and position themselves for long-term success.
Ready to see how OpenHouse.ai can help you navigate today’s housing market?
