By Shaina Mishkin

Companies related to the home building industry will feel the pain from U.S. tariffs on imports, analysts warned. The stocks were falling on Tuesday as President Donald Trump's levies on goods from Canada, China, and Mexico took effect.

The iShares U.S. Home Construction exchange-traded fund was on track for its lowest close since late 2023, according to Dow Jones Market Data. The ETF was down about 1.5% in morning trading at $95.67.

Tariffs will make building a home more expensive, a cost that is likely to get passed along to consumers, Barron's recently reported .

"Rising costs due to tariffs on imports will leave builders with few options," Realtor.com chief economist Danielle Hale said in Tuesday. "They can choose to pass higher costs along to consumers, which will mean higher home prices, or try to use less of these materials, which will mean smaller homes." ( News Corp, which owns Barron's, also owns Realtor.com operator Move.)

Housing costs are of particular concern as the spring, a typically busy season for home sales, approaches. Prices remain high and mortgage rates are still above 6%, though they have fallen with the 10-year Treasury yield in recent weeks on signs of a cooling economy. Mortgage News Daily on Monday pegged the 30-year fixed rate at 6.74%, down from levels above 7% as recently as February.

Shares of companies in the home construction industry have sagged in recent weeks on the tariff threats -- though the iShares fund's best performers on Tuesday morning were largely traditional home builders. Of the ETF's eight stocks in the green in midmorning trading, five were home builders. The group was led by D.R. Horton, which was up 0.5% , FactSet data show.

The worst performers on Tuesday were home material and supply companies AZEK, Owens Corning, and Hayward. The stocks were down 4.7%, 4.5%, and 4.2%, respectively, according to FactSet. AZEK declined to comment. Owens Corning and Hayward didn't immediately comment.

Sentiment in the industry has taken a beating from political uncertainty and still-high costs. The National Association of Home Builders' measure of builder confidence fell in February as concerns about tariffs pushed sales expectations for the spring and summer lower.

The Trump administration's anticipated tax cuts and easier building regulations could be tailwinds for the industry, National Association of Home Builders chief economist Robert Dietz said in a Tuesday statement.

"But tariffs and potentially higher deficits could dampen market momentum," he added.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 04, 2025 12:52 ET (17:52 GMT)

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