Shares of US home builders slide on fears of higher tariffs and Trump tariffs

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Shares of the US population have fallen as fears that interest rates will remain high for a long time add to concerns that President Donald Trump’s potential tariffs and mass layoffs will raise construction costs.

Since Trump won the election in November the S&P 500 index of home construction has fallen 17.3 percent to its lowest level since July. US steel makers and furniture groups have also struggled to sell after the two-year crisis following the pandemic.

Shares in DR Horton, America’s biggest homebuilder, have fallen 17 percent in the two months since Trump won. Residential construction stocks Lennar and PulteGroup lost 21 percent and 15 percent over the same period. The three homebuilders lost a combined $76bn in market value.

The decline marks a sharp turnaround from the first quarter of last year, when homebuilders’ shares rose as sales rose and interest rates remained at their highest level since 2001.

While the average 30-year mortgage rate remained above 6 percent at the end of last year, successive rate cuts by the Federal Reserve since September have caused the construction sector to houses and become stronger.

But the growing inventory of new and completed homes built after the pandemic began is weighing on supply, data from the Reserve Bank of St. Louis show. a decrease from the previous year number of houses under construction.

Sentiment among investors has deteriorated significantly over the past two months. “It’s (Trump’s) policy, the prospect of tariffs, the list of things that are going up. . . “The ground conditions have changed compared to last year,” said Jonathan Woloshin, an analyst at UBS Wealth Management in the United States.

Estimates released by the Fed in mid-December suggested that interest rates will fall in 2025 less than previously expected. Analysts and companies alike worry that Trump’s “America First” policies could raise costs, from construction materials to access to workers.

Trump has promised to deport millions of immigrants. More than a quarter of the construction workers are immigrants and 13% of workers are unlicensedthe largest share of any sector, according to US census Bureau data.

In December, Barclays downgraded DR Horton, PulteGroup and KB Home, writing to clients that a combination of prices for key construction materials including steel – as well as moving trends and rising housing stock – was it meant that “home builders will get a lower rate of return. . . . full of obstacles”.

The construction market “has now reached the ceiling”, said Matthew Bouley, an analyst at Barclays.