High interest rates and immigration uncertainty are making Americans put off home improvements, hurting the US housing market
High interest rates and President Donald Trump’s unclear plans regarding tariffs and mass deportations are significantly affecting demand in the US home improvement sector. This marks another sign of a sluggish housing market.
Shares of Jeld-Wen Holdings, a company specializing in residential doors and windows, dropped 6% on Friday, hitting a record low of $5.50. In a recent earnings report, Jeld-Wen projected that its revenue would decline by 4 to 9 percent in 2025 compared to the previous year.
This decline came despite company chair David Nord purchasing $119,000 worth of the company’s stock earlier this week, a move typically interpreted by investors as a sign of confidence.
Shares in AO Smith, which sells water heaters, and BlueLinx, which deals with plywood, also reached their lowest levels since late 2023. Earlier in the year, AO Smith projected flat to modest sales growth for 2025, while BlueLinx warned of ongoing uncertainty regarding the timing of a potential housing market recovery.
Residential remodeling and home construction, which account for around 4% of US GDP, have been severely impacted by the Federal Reserve’s decision to keep interest rates elevated for longer periods. Adding to the pressure, the Trump administration’s tariff threats and its crackdown on undocumented workers are straining the market further.
“It has been tepid for a while now really since the Fed began raising rates, and I also think the consumer is pretty conservative right now,” stated Nicholas Fink, CEO of Fortune Brands, the parent company of Moen.
According to its latest annual report, Fortune Brands indicated that tariffs and retaliatory tariffs could drive up raw material costs.
Over the past 12 months, Fortune Brands’ share price has fallen by 21%. Sales in its water division, which includes Moen, remained flat last year, and organic sales, excluding China and US hurricanes, decreased by 2%.
Pending home sales hit a record low in January, according to a report from the National Association of Realtors released last week. High mortgage rates continued to deter potential buyers, with rates hovering near 7% across the country.
Home Depot, the nation’s largest home improvement retailer, showed signs of growth in same-store sales in its latest quarterly report, but management has forecasted only a modest 1% increase for 2025.
The sustained high interest rates have prevented many homeowners from selling or borrowing for major remodeling projects.
Trump’s focus on deporting undocumented workers presents a specific challenge for the construction industry. Although the exact number of undocumented workers in construction is unclear, ISI Evercore estimated in December that at least 15 to 20 percent of the workforce could be undocumented.
“Absolutely some of the activity around deportations is a risk for this sector,” said Kurt Yinger, vice-president at DA Davidson.
Concerns about immigration enforcement officers removing construction crews create risks, Yinger explained, noting that it could lead to certain crews failing to show up the following day.
“These disruptions could exacerbate what is already expected to be a relatively weak demand year for housing,” he added.
BlueLinx’s annual report this year also highlighted that labor shortages caused by immigration enforcement activities pose a risk to the industry.
“Anything we do to increase the cost of homeownership I think is going to be counter-productive,” said BlueLinx CEO Shyam Reddy.
