Tariff Exemptions Lift Homebuilding Stocks: DHI, DFH, NVR, LEN, PHM Gains

Homebuilding stocks got a much-needed boost after President Trump left Canadian lumber out of sweeping new tariffs. Homebuilding stocks surged Friday as investors cheered a favorable policy outcome for the housing industry. Tariff exceptions for Canada and Mexico "amount to a major win" for homebuilders, the National Association of Home Builders said in a statement.Shares of several top homebuilders made solid gains in the session. D.R. Horton DHI climbed 4.6%, while Dream Finders Homes DFH jumped 5.1%. NVR NVR rose 4.2%, Lennar LEN rose 2.4%, and PulteGroup PHM gained 3.6%. The rally was notable amid a broader market that remains cautious on global trade policy shifts. The iShares U.S. Home Construction ETF ITB also rose 2%, reflecting positive investor sentiment toward the sector.Tariff Relief Ignites Optimism for Homebuilding IndustryThe gains followed President Trump’s April 2 announcement of sweeping new tariffs—a 10% baseline tariff on nearly all trading partners and elevated rates of up to 50% for certain countries. However, the administration made a key exception for Canada and Mexico, shielding critical construction materials, such as softwood lumber, gypsum, and concrete, from new duties.For the housing sector, that exception was a game changer. Canada supplies roughly 85% of U.S. softwood lumber imports, which account for nearly a quarter of domestic supply. Lumber has been a chronic pain point for builders, with prices already inflated by a 14.5% existing tariff and supply disruptions. Fears of additional costs—via a new 10% reciprocal tariff—had been weighing on sentiment. The administration’s decision to leave Canadian lumber untouched gave markets the clarity and relief they were waiting for.Housing Market’s Sensitivity to Material CostsBuilding material costs have skyrocketed 34% since December 2020, far outpacing inflation. The average single-family home requires $174,155 in building materials, with imports making up $12,713 of that total, according to the March 2025 NAHB/Wells Fargo Housing Market Index. Every percentage change in tariffs can significantly affect profitability across the homebuilding sector.Builders had warned that recent trade policies could add $9,200 in construction costs per home. Friday’s stock surge suggests investors are now pricing in lower-than-expected cost pressures, particularly for companies heavily exposed to wood framing and Canadian lumber supply chains.A Complex Landscape for Homebuilding IndustryThe Zacks Building Products - Home Builders industry has lost 13.5% so far this year, performing comparatively better than the S&P 500’s 14.1% decline and the broader Construction sector’s 15.9% decline. Image Source: Zacks Investment ResearchFriday’s rally signals renewed confidence in the fundamentals of the homebuilding sector, especially for companies positioned to benefit from stable lumber supply and modest input cost relief. While broader material price volatility remains a concern, the avoided lumber tariff gives the sector room to breathe—and reason for investors to re-engage.While the lumber exemption is a clear positive, the broader tariff policy introduces complexity and risk. Tariffs remain in place—or are increasing—on imports from Asia, particularly China and South Korea, affecting home appliances, steel, copper, and other key construction components.Trump’s reciprocal tariff strategy—imposing duties on nations that charge higher tariffs on U.S. goods—has resulted in some Chinese imports facing duties of more than 50%, compounding existing supply chain stress.As always, selective stock picking will be key. Firms with high exposure to domestic suppliers and Canadian lumber, such as D.R. Horton and Lennar, may continue to benefit from tailwinds as the new tariff policy unfolds.Prospects of the Above-Mentioned Homebuilding CompaniesD.R. Horton’s prospects are benefiting from its focus on accretive investments in homebuilding lots, land and development accompanied by addressing ongoing affordability concerns in the housing market by offering incentive options like mortgage rate buy-down. D.R. Horton is known for working closely with regional suppliers and maintaining a diverse supply network. Its scale gives it more leverage to source materials domestically and lock in contracts with U.S.-based manufacturers. D.R. Horton currently carries a Zacks Rank #2 (Buy). The company’s three-to-five-year expected earnings per share growth rate is currently pegged at 18.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Dream Finders Homes is a relatively newer public homebuilder with a lean, asset-light model.  The company relies on local subcontractors and regional networks, which reduces its need for imported materials. Dream Finders Homes’ earnings estimate trend for 2025 has moved upward to $3.14 from $3.11 in the past 60 days. DFH currently carries a Zacks Rank #2 and has a VGM Score of B. (read more: Dream Finders Stock Drops 39% in 6 Months: Buy the Dip or Wait?)NVR operates under a lot purchase agreement model, which limits land holding and focuses more on construction efficiency. As of 2024-end, lots controlled by NVR were up 14.8% to 162,400 from 141,500 in the prior-year period. With a geographic footprint primarily in the East and Midwest, NVR works with local suppliers, reducing exposure to global material markets. The NVR stock currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B.Lennar is gaining from increased cycle times, benefits from the land & asset-light model and demand strength driven by incentives and interest rate buydowns. The Lennar machine (digital marketing programming) has enabled the company to focus on ensuring orderly home sales, aligning with the pace of construction. The Lennar stock currently carries a Zacks Rank #3 and has a VGM Score of B.One of the more regionally diversified builders, PulteGroup works with local suppliers and sub-contractors across various markets, helping reduce reliance on imports. The company has invested in supply chain technology to better forecast and manage domestic sourcing. PulteGroup is benefiting from facilitating various strategic initiatives, including a balanced operating model, offering an appealing mortgage rate buydown program and a favorable pricing structure. The PulteGroup stock currently carries a Zacks Rank #3 and has a VGM Score of B.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PulteGroup, Inc. (PHM): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis Report D.R. Horton, Inc. (DHI): Free Stock Analysis Report NVR, Inc. (NVR): Free Stock Analysis Report iShares U.S. Home Construction ETF (ITB): ETF Research Reports Dream Finders Homes, Inc. (DFH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks