As new tariffs on construction materials take effect, metro Phoenix homebuilders brace for the financial hit. Ken Peterson, vice president of sales and marketing for Shea Homes Arizona, warned that these tariffs could raise housing costs by $8,000 to $10,000 on average, "Today, since there is inventory stock from the builders, there's an opportunity to get a home at an attractive interest rate and at a lower price," Peterson conveyed to ABC15 News.
Despite the impending cost surge, homeowners may find a silver lining as builders like Shea Homes currently sell houses constructed with pre-tariff materials. Peterson expects an additional $1.50 to $2 per square foot to the cost of future homes. Homebuilders have previously cushioned mortgage rate spikes with incentives, such as rate buy-downs, which could help mitigate the impact of the tariff-induced price increases.
Moreover, Freddie Mac recently reported a dip in the 30-year fixed-rate mortgage to 6.64% as of April 3. This decline, coupled with the current economic slowdown, suggests mortgage rates may continue to trend downward, offering some relief for prospective buyers. "A lowering interest rate also lowers points to buy down interest rates," Peterson told Phoenix Business Journal, explaining how this benefits both homebuilders and buyers.
Buyers eager to capitalize on the current market conditions are finding deals, particularly with inventory homes. Peterson notes that purchasing an inventory home not only locks in a rate but also reduces costs for both the customer and the builder. Shea Homes, having delivered 1,192 homes in Arizona in 2024 and with 13 active communities, provides myriad options for those ready to buy now, before the tariff impact is fully felt on construction material costs.
A balance in the housing market combined with Phoenix's robust job creation bodes well for sustained housing demand, according to Keith Mishkin, president and broker of Cambridge Properties. "Phoenix leads the market in our nation as one of the top three creators of jobs in the country," Mishkin stated to Phoenix Business Journal.
