Powell: Builders impeded by tariffs, shortages of labor

The U.S. housing shortage has the attention of Federal Reserve Chairman Jerome Powell who said homebuilders are having a harder time building lower-cost housing.

Builders are being held back by a “series of factors,” including higher materials costs, a shortage of skilled labor and President Donald Trump’s immigration and tariffs policies, Powell said during a Senate Banking Committee hearing Thursday.

“What we hear from the homebuilders is that it’s a series of factors that are really holding them back and driving and challenging affordability,” Powell said in response to a question by Democratic Sen. Tina Smith of Minnesota.

Powell said tougher immigration policies might be in part to blame for the difficulty in finding workers, and tariffs also drive up costs.

“Material costs too have gone up, and some of that is tariffs, for sure,” he said. “The homebuilders feel almost like they’ve been hit by a perfect storm.”

“Material costs too have gone up, and some of that is tariffs, for sure. The homebuilders feel almost like they’ve been hit by a perfect storm.” Fed Chair Jerome Powell

Higher tariffs have increased costs for construction materials, he says, and tighter immigration enforcement has made it harder for builders to find workers. Even though the Fed has kept rates low and mortgage rates have fallen, those factors have pushed developers to build higher-priced homes to cover the bigger costs.

Powell, under questioning from Sen. John Kennedy, Republican of Louisiana, says legal and illegal immigration can help the U.S. economy by increasing the size of the workforce. When asked whether illegal immigration lowers U.S. wages, Powell said extensive research on the subject “has not reached a clear conclusion.”