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By Piero Lorenzo — Lorenzo International Real Estate
Tariffs and Housing Costs in 2025 The U.S. housing market is never immune to global economics. In 2025, tariffs introduced by the Trump administration are shaking up real estate costs. From building expenses to buyer psychology, these trade policies are leaving a clear mark on affordability. As someone who works daily with both U.S. and Italian buyers, I see the contrast up close. 1. Rising Construction Costs Tariffs on steel, aluminum, lumber, gypsum, and even appliances have pushed building costs up by more than 30% since 2020 (Washington Post, May 2025). I saw this firsthand with a client of mine — an Italian builder investor who wanted to develop a new property in California. We ran the numbers together and realized that just in the past months, the cost of materials had risen so sharply, primarily because of tariffs, that his original business plan no longer worked. He had to change direction entirely. In markets like Houston, builders now estimate tariffs may add $8,300–$12,500 to the cost of constructing a standard 2,000 sq. ft. home (Houston Chronicle, 2025). And since materials make up roughly 65% of total construction costs (Investopedia, 2025), even a modest increase ripples into much higher final prices. 2. Slower New Construction As construction becomes less profitable, developers are pulling back. The segment most affected? Entry-level homes, which were already in short supply (Houston Chronicle, 2025). For first-time buyers, this means less choice and more competition — hardly the recipe for affordability. 3. Buyer Hesitation Tariffs don’t just affect builders; they also weigh on buyer confidence. - Pending home sales fell sharply in April 2025, one of the steepest spring declines since 2023 (Investopedia, 2025). - Surveys show nearly 1 in 4 buyers delayed or canceled purchases over tariff-related concerns (MarketWatch, 2025). When uncertainty rises, hesitation follows. I hear this often from my American clients: “Maybe we should wait.” But waiting can also mean missing opportunities. 4. A Market Under Pressure: The combination of higher costs, reduced supply, and nervous buyers has created a paradox: prices remain elevated because of limited inventory, but sales volumes are falling because fewer buyers feel comfortable jumping in. Economists estimate tariffs alone are adding about $11,000 per new home (Washington Post, 2025). What This Means for American Buyers For U.S. buyers, tariffs are a reminder that the housing market doesn’t operate in isolation. Global trade policies, currency swings, and supply-chain dynamics all influence affordability and investment potential. Here's where my cross-border work comes in. In Italy, buyers discover opportunities in historic homes that are not affected by construction tariffs, and in markets with strong short-term rental demand like Florence, Rome, Naples, and Lake Como (AirDNA, Statista). U.S. vs Italy Real Estate in 2025: At a Glance To make the comparison more straightforward, here’s a chart contrasting the two markets: Chart: Real Estate Comparison 2025 (United States vs Italy) 
Scores (1 = low, 10 = high):
Why Work With Me I’m Piero Lorenzo, a dual-experienced real estate broker in both California and Italy. I help American buyers:
Trump’s 2025 tariffs are reshaping the U.S. real estate market by increasing costs, slowing development, and making buyers more cautious. For investors and many of my American clients, this moment has opened their eyes to a more innovative alternative: investing in Italy, where they can enjoy a lifestyle, history, and strong ROI potential. Ready to explore Italian real estate? Visit www.pierolorenzorealtor.com and let’s run the numbers together. Sources
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AuthorI’m Piero Lorenzo, a California-licensed broker with over 24 years of experience. I specialize in helping Americans find and buy their dream homes in Italy. ArchivesCategories |
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