As Rhode Island continues to grapple with a mounting housing crisis, proposed federal tariffs on lumber and other essential building materials could add more pressure to an already strained market. While the policy change is national in scope, its impacts will be felt acutely here at home—especially by homebuyers, builders, and affordable housing developers striving to meet demand in one of the nation’s tightest markets.
The U.S. Department of Commerce recently announced an increase in tariffs on Canadian lumber imports—an essential resource for home construction. According to the National Association of Home Builders (NAHB), these tariffs could raise the average cost of building a single-family home in the U.S. by tens of thousands of dollars, and potentially even significantly more.
This is particularly problematic in Rhode Island, where demand continues to outpace housing supply and affordability is increasingly out of reach for many. The bulk of new residential construction in the Ocean State uses wood-frame methods, and wood comprises approximately 75% of the total material in these builds. A 25% increase in the cost of lumber could drive up overall construction costs by as much as 15%, and once you factor in financing and developer overhead, that number could jump to 20% or more. That additional cost almost always gets passed along to buyers and renters.
Local developers are already taking defensive steps. Some affordable housing organizations have begun pre-ordering materials—such as appliances and materials—to get ahead of potential price increases on large-scale projects. But for many builders, especially smaller firms or those working within tight funding parameters or budgets, there’s only so much that can be done to absorb the rising cost of materials.
Across Aquidneck Island and coastal South County—where developable land is limited and permitting processes can be lengthy—even modest cost increases can make or break a project. When costs rise, developers either delay building, scale back their projects, or shelve them altogether. That means fewer homes being built in neighborhoods that desperately need them.
This cost volatility couldn’t come at a worse time. Rhode Island’s median single-family home price has soared to $450,000 this year—up more than 40% since the pandemic. And with interest rates hovering around 7%, many potential buyers are already priced out of the market. An increase in build cost might not mean much to institutional developers, but for a middle-income buyer, it could be the difference between qualifying for a mortgage or not.
According to HousingWorks RI, more than 35% of Rhode Island households are already “cost burdened,” meaning they spend over 30% of their income on housing. With construction costs climbing, the long-term consequences could include an even tighter market, greater competition for limited inventory, and further displacement of working-class families.
For towns like Newport, Middletown, Portsmouth, and Jamestown—where the tourism economy depends heavily on service workers and seasonal staff—the housing crisis is not just a real estate issue. It’s an economic one.
Local builders are already contending with labor shortages, long lead times on materials, and increased regulatory hurdles. The added strain from tariffs on essential materials like lumber and steel could tip the scales further. In some cases, it could push builders out of the market entirely, stalling much-needed housing production and weakening the already fragile pipeline of workforce housing.
Trade policy may seem far removed from the day-to-day realities of the local housing market here in Newport County, but its effects are anything but distant. As federal agencies continue to review and implement new tariff structures, Rhode Islanders, particularly those hoping to buy, rent, or build in the near future, will feel the ripple effects.
It’s now up to state and local officials, along with housing advocates and developers, to make the case for creative solutions. That could include increased public subsidies for affordable housing projects, expedited permitting processes, or state-level programs to help mitigate cost increases due to federal policy changes.
At a time when the state is working to add tens of thousands of new housing units by 2030, the impact of these proposed tariffs on wood-frame construction must be closely monitored. And for Rhode Islanders, this isn’t just a policy issue in Washington. It’s a kitchen-table issue at home.