Dallas-Fort Worth home builders got a slower start to 2025 as buyer demand slowed and firms worked to deplete a stockpile of inventory. They must now contend with a rapidly changing economic picture around them.
Potential tariffs cast shadows over the industry, leaving the road ahead unclear. President Donald Trump backed down on most reciprocal tariffs for 90 days this week but raised tax rates on Chinese imports to 145% on Thursday.
Builders who spoke with The Dallas Morning News said they aren’t feeling any negative impacts from the tariff uncertainty yet. However, suppliers have warned builders of potential price increases. Builders worry they may be forced to absorb rising costs.
Others worry more about buyers. The volatility could further weaken consumer confidence and demand.
The price of a newly built home in Dallas-Fort Worth is up $103,000 since the beginning of 2020, according to data from Zillow Research. As of January, the median new-build home sold for $460,319 in the region. Inflation and demand have increased the cost of all housing.
“I’m more concerned about the psyche of the consumer than I am about ongoing cost pressure,” said Jay Hankla, general manager of Shaddock Homes. “I don’t think any of us in homebuilding really know exactly how it’s going to pan out. … We’re all kind of in uncharted waters right now.”
New homes are an increasingly important need in Dallas-Fort Worth, a region that added nearly 178,000 new residents a year, or almost 500 a day, according to recent U.S. Census data. One estimate says that Dallas-Fort Worth still needs about 50,000 homes.
The stats
Builders started 12,850 new homes during the first three months of the year, down 10.8% from the 2024 pace, according to a new report from Residential Strategies. The Dallas-based research firm tracks Texas’ new home industry.
The annualized start rate dropped 5.4% to just under 52,000 units. New home closings declined slightly, falling 7.5% to 12,313 homes.
Finished vacant inventory remains elevated in North Texas. At the end of March, there were 11,574 finished vacant homes, up 4.3% from year’s end. The rise in unfinished inventory has triggered price discounts and further buyer incentives, cutting builders’ profits.
Job growth and mortgage rates did no favors for builders in the first quarter. The Texas Workforce Commission showed that D-FW created 53,600 net jobs for the 12-month period ending in February. Residential Strategies says that number is 42% below the region’s 15-year average.
The average 30-year mortgage rates remained about 6.5% during the first three months of the year, topping out at just over 7% in mid-January, according to data from FreddieMac.
“Our builder clients tell us they’ve had to ‘scratch and claw’ to hit their sales targets,” said Ted Wilson, principal for Residential Strategies. “The combination of elevated mortgage rates, sluggish job growth, and an accumulation of unsold speculative inventory has led to a more cautious home start approach among builders.”
Tariffs could add to pressure
The threat of tariffs may put additional stress on the region’s homebuilding industry.
Tariffs on critical homebuilder materials could raise the average cost of a home by $9,200, according to the March National Association of Home Builders/Wells Fargo Housing Market Index.
Three builders who spoke with The Dallas Morning News said they’re unclear about how tariffs may affect their business. There aren’t imminent threats of significant increases. However, roofers, tile suppliers, HVAC companies and others have warned them of potential price increases.
“We’ve been getting a lot of letters from suppliers warning us about potential cost increases due to the tariffs,” said Don Dykstra, co-founder of Bloomfield Homes. The firm is one of the region’s top five home builders by volume. “But it seems like people are taking a wait-and-see approach before enforcing the increases.”
Dykstra said his company worked with his contractors to stock up on extra supplies of lumber, lighting and blinds here and there.
“There’s a lot of stuff that comes from overseas — tile, granite, window blinds. There’s chips in all kinds of things,” he said.
Smaller builders like Steve Langridge of Taft Homes don’t have the means to source and buy products in advance. But so far, two big factors in the homebuilding industry remain relatively in their favor — labor and lumber.
Trump opted not to add a reciprocal 10% tariff on Canadian lumber, keeping the tariff rate at 14.5%. The National Association of Home Builders expects the rate will move higher later this year.
Builders in D-FW rely on lumber sourced from parts of Arkansas, Louisiana and Texas, along with other domestic sources. However, a portion of wood used as studs is sourced from Canada, Langridge said.
“When [lumber] was removed from tariff exposure, it was almost as if there’s a breath of life back in the home building market,” he said. “Tariffs are being monitored but not feared.”
Because home starts are down, the labor market is softer. Roofers, framers, masons and painters are all eager to work, and they are willing to do so at a reduced price, Langridge said.
“Daily, I get calls from brickers and painters and even some trades that you otherwise wouldn’t hear from, who are all trying to replace what is going to be a down year. All those guys want to work,” he said. “An oversupply of labor bodes well for us for the balance of this year.”
The country’s largest builders are keeping an eye on tariffs, too. Lennar, the country’s second-largest homebuilder by volume, said in its earnings call in late March that it is discussing potential tariff impacts with its supply chain.
“To date ... we have had no impact to our cost from tariffs,” said Lennar co-CEO and President Jon Jaffee.
Attempts to contact Arlington-based D.R. Horton, the nation’s largest homebuilder by volume, were not returned.
Builders are making adjustments as needed. A faucet supplier told Shaddock Homes that their faucet of choice might be getting more expensive. The solution: go to a new faucet.
“We’re pushing back where we can,” said Hankla, the firm’s general manager.
If supply costs increase dramatically, Hankla said he doesn’t think the extra cost could be passed on to the buyer. Many customers are “maxed out” on what they can afford, and builders have become more reliant on rate buydowns and other incentives to sell homes.
Affordability remains a concern in D-FW. The median price of a home sold in North Texas in March was nearly $396,000, roughly the same as last year. This includes existing and newly built single-family homes sold on the MLS.
Builders may be forced to eat any potential increase or get creative. The recent pause helps, Dykstra said.
“Business doesn’t like uncertainty,” he said. “I hope they can negotiate some solutions, and we can get more predictability on cost and supply.
