Trump’s tariffs already hitting Las Vegas Valley’s real estate industry

The Las Vegas Valley’s real estate industry is already feeling the financial pain from the Trump administration’s tariffs and market uncertainty regarding the president’s economic policies, local executives say.

Trump’s tariffs are already hitting the bottom line for a Las Vegas-based commercial contractor.

“In the Las Vegas commercial construction industry, we’re directly feeling the impact of tariffs on steel and aluminum, both of which come from Mexico and Canada,” said Cory Frank, vice president of business development and project management for Nigro Construction, which has operated locally for 40 years, focusing on health care, retail and industrial projects. “While this is a dynamic situation that continues to change, our subcontractors are currently seeing anywhere from 10-15 percent increases in material costs, with some projections reaching 20-25 percent in the next few weeks.”

The Trump administration has imposed tariffs of up to 25 percent on certain goods from the U.S.’s top two trading partners, Mexico and Canada, with additional 10 percent tariffs on goods from China. A recent CBRE Group Inc. report outlined that the automotive and constructions industries will most likely be the two hardest-hit sectors by the tariffs because of their interconnected supply chains in North America. Frank said this is already trickling down to their operation, but the industry is trying to adapt.

“These increases are impacting budgeting and project timelines, but as a contractor, our priority is making financially responsible choices that help our clients save as much as possible while keeping projects on track,” he said. “While tariffs are pushing costs higher, we and our subcontractors are doing our best to stay ahead of them by planning purchases in advance and making smart sourcing decisions.”

The CBRE report said tariffs will hit all aspects of the real estate industry, but some will feel the effects more acutely than others.

“Tariffs can also have a material impact on the cost of commercial real estate construction. Some property types will be more affected than others. For example, industrial projects will be less impacted than multifamily projects given different equipment and materials requirements,” the report said. “Assuming 25 percent tariffs on Mexican and Canadian goods, as well as higher tariffs on Chinese imports, construction costs for commercial projects could increase by between 3 and 5 percent which could persuade developers to put some projects on hold.”

Homebuilders hit

Tina Frias, chief executive officer for the Southern Nevada Home Builders Association said while they have yet to see tariffs impact the price of homes, there is a general sense of uncertainty and market volatility within the homebuilding industry right now.

“Given the many unknown variables associated with tariff negotiations, making definitive long-term predictions about their impact on the housing market and broader economy would be premature,” she said.

Frias added on top of tariffs the housing market is facing a number of other challenges such as availability of land, the regulatory environment and labor constraints on the construction industry.

“These factors continue to drive up development costs and affect our ability to deliver the housing supply needed to meet the demand in our market,” she said.

According to data from the Southern Nevada Home Builders Association, 2024 closed with a total of 11,988 permits for new home construction, slightly above the average for comparable years. As of February, she said homebuilders have pulled 1,744 permits, which she said was a “strong start” for the first two months of the year.

“Looking ahead, we anticipate ending 2025 with approximately 11,500 permits. This slight dip is not due to a decrease in demand but rather a slowdown in land purchases during 2022 and 2023,” she said. “Builders exercised caution in response to rising interest rates, while ongoing land scarcity remained a challenge to expanding the future supply pipeline.”

The National Association of Homebuilders said in a new report released March 21 that tariffs are projected to raise the cost to build a new home by approximately $9,200 and softwood lumber costs are up 11.7 percent compared to this time last year.

This has put an additional strain on an already strained market said the report, as approximately 110.6 million households are already priced out of the residential real estate market across the U.S. An estimated $1,000 increase in the median price of a home in the country would further push an additional 115,593 people out of the market, the report said.

Impact on residential real estate

One of the most volatile industries in the valley right now is residential real estate as prices have recently broken record highs and mortgage rates remain elevated. Homebuilders say a lack of land is also choking the market and regarding one of the key ingredients in building more homes, lumber, the U.S. gets most of it from Canada, according to the United States International Trade Commission.

Tia Roman, a local broker and Realtor with Re/Max, said potential buyers and sellers are thinking now is the time to act, given economic uncertainty could make the market even more unaffordable as costs to build homes invariably go up.

“Everyone is thinking prices are going to go up (due to tariffs), and, of course, they are especially on new builds,” she said. “But even existing homes, a lot of people end up putting money into a home before they sell it.”

Roman said tariffs are on the minds of her clients but they believe the potential cost implications are still a ways down the road and not a short-term worry, thus buying or selling now is their best bet.

“Most people know about the tariffs but no one seems to think they will impact them right away.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.