The housing market dilemma under the tariff storm! Economists warn: 2025 may become the "lost year" for U.S. real estate

According to the Zhitong Finance APP, as Trump's tariff policy may reignite inflation and lead the U.S. economy into recession, the real estate market is facing severe challenges.

Daryl Fairweather, chief economist at Redfin, stated, "In terms of supply and demand, this year is likely to become another lost year for the real estate market."

Fairweather pointed out that the tight housing inventory situation is difficult to alleviate, noting that "developers will lack the motivation to build in the face of tariffs on building materials and labor shortages caused by immigration policies."

Although the U.S. government has reduced the highest tariffs on some Chinese goods, lowering the likelihood of a U.S. recession, the overall tariff levels remain significantly higher than at the beginning of the year.

Economists like Fairweather predict that inflation will rise at least temporarily, which may force the Federal Reserve to maintain high interest rate policies for an extended period. She warned that rising construction costs could "spill over into the economy in unpredictable ways," and currently, housing inflation has become one of the most stubborn areas of price increases.

If the increase in housing prices is lower than the overall inflation rate, real housing prices may depreciate. However, Fairweather believes that a repeat of the 2008-style housing market crisis is unlikely, as most homeowners have locked in low-interest loans, which will suppress home sales.

Fairweather stated, "The real estate market is in an exceptionally difficult situation. I believe that if a recession overlaps with a trade war, it could severely impact property values."

Housing Affordability Crisis Intensifies

For many Americans, the threshold for homeownership has become insurmountable. Trump's tariff policy has driven up the cost of building materials, coupled with labor shortages caused by immigration policies, making the hope of homeownership even more elusive.

Builder PulteGroup (PHM.US) warned in its latest quarterly report that the cost of building materials has already risen, with key materials such as bathroom fixtures, water heaters, and tiles affected by a 10% global tariff.

Although some building materials like copper and lumber have received tariff exemptions, the additional costs of imported appliances will ultimately be borne by consumers.

Fairweather pointed out that for potential homeowners, the Midwest may be the last "price valley" for housing. However, for those whose careers require settling in high-cost areas, relocating is not a feasible option.

Nevertheless, this economist also provided constructive suggestions for improving housing affordability.

She noted that the federal government "does not actually control housing policy." Instead, this responsibility falls on local governments, which means that ordinary citizens can also promote increased housing supply by participating in local planning commission hearings.

Fairweather said, "This is a way to improve that benefits all social classes. When rents rise, the most vulnerable groups are the first to face the risk of homelessness. If we want to change the status quo, starting with participation in local planning hearings is a great starting point."