Trump’s War On Iran Is Squeezing The Housing Market
The global supply chain crisis could worsen the U.S.' ongoing housing crisis.
President Donald Trump recently said, on camera, “I don’t want to drive housing prices down. I want to drive housing prices up for people who own their homes.” And he’s getting his wish.
As the Iran War threatens the global economy, one of the United States’ biggest economic pain points could soon get even worse: the nation’s housing crisis. The newly-released Producer Price Index data from the Federal Reserve revealed that the average cost for raw and intermediary goods tracked within the nation’s supply chain had increased more than 6 percent since April 2025, with many products making huge price leaps in the last two months. Between tariffs and the higher gas prices caused by the Iran War, some of these numbers have jumped by nearly 50 percent.
Such significant price jumps have already been measured in the Consumer Price Index — a similar metric which tracks the price of consumer goods — which shows an increase of 3.8 percent since this time last year. Consumers are already feeling these effects: Housing costs are already up more than 3 percent since last year, food is up about 3 percent, airline fares have risen nearly 21 percent. New polling from Gallup shows that Americans’ confidence in the economy is its lowest since 2022 — 49 percent of Americans rank the economy as “poor.”
The effects of higher Producer Price Index numbers, meanwhile, will be felt further down the line, for every industry – including construction, which experts predict could have dire consequences for housing costs.
Concrete, used for foundations, is up just 3 percent. But the average cost of delivering that concrete is up 20 percent. Iron and steel prices are up 4.5 percent. Copper, used for wiring and electricity is up 26 percent. Softwood lumber for plywood is up 12 percent since last year, though that’s because Trump more than doubled tariffs on Canadian lumber. Asphalt, used for driveways and roofing, were up 29 percent this month. And diesel fuel, which is used to manufacture and deliver everything, shot up 12 percent this month after a 42 percent increase last month.
The increased cost of raw and intermediary construction materials means it’s more expensive to build housing, discouraging new construction and putting projects on pause. Ken Simonson, a building trade economist with Associated General Contractors of America, which represents general contractors across the construction industry, told More Perfect Union that “the implications are dire for construction.” Simonson explained that the economic shocks of the war and tariffs are “a slow-moving issue even though the price increases are happening rapidly.” And they will likely get far worse.
“Projects will be canceled or at least deferred in the hope that prices come back down,” Simonson said.
Ultimately, the squeeze on construction materials could push housing costs even higher. Though estimates vary, experts suggest that the United States could require anywhere from 3.7 million to 5.5 million more houses to fill the housing supply gap. If those houses aren’t built, it could raise prices even higher for existing homes, which are already out of reach for 70 percent of Americans who want to own homes but cannot afford to.
A continued supply shortage of houses will likely keep people renting for longer and increase competition for a tight rental market, trends which are already squeezing Americans’ budgets.