The stock market’s reaction to President Trump’s reciprocal tariff announcement has been swift and dramatic.
The S&P 500 has lost approximately 7% of its value year-to-date, and experienced a steep decline since the sweeping April 2 tariff announcements. The index—and overall stock market—roared back on April 9 following the announcement that reciprocal tariffs would be put on pause for 90 days with the exception of China.
Prior to the initial tariff-related decline of the stock market, uncertainty and consumer hesitancy already manifested in a slow start to the year for home buying activity.
Zonda’s latest New Home Market Update indicates new home sales declined 12% year-over-year in February with Zonda chief economist Ali Wolf noting stock market volatility as one of several factors contributing to concern for would-be buyers.
“We were hoping for a pop [in the spring selling season] and it’s been more bumpy,” explains Zonda chief advisory officer Tim Sullivan.
While entry-level buyers have been more acutely impacted by affordability concerns, labor market uncertainty, and policy uncertainty, move-up and luxury buyers are also likely to be impacted by the volatile stock market.
“Wealthier buyers are often more discretionary. This means that while they can financially navigate the market, many already own homes so do not need to rush into their next move,” says Wolf. “Periods of instability or stock market volatility can slow this buyer group.”
Consumers relying on stock portfolios to fund either down payments or housing costs are likely to be more cautious in the short-term. A volatile stock market has a direct impact on consumer confidence, making consumers feel like they have less money.
Builder Stocks and M&A Market
Builder stocks have dipped along with the broader market since the announcement of President Trump’s tariff plan. Investor concerns of higher construction costs translated to a fall in builder stock prices.
The SPDR S&P Homebuilders ETF is down nearly 10% year-to-date nad also experienced a boost following the pause on reciprocal tariffs. While tariffs will likely eventually impact builder margins, the impact will not be immediate as many of the tariffs will be implemented in the medium and long term future.
“There is a fear or hysterical feel amongst many investors. Warren Buffet says to be fearful when others are greedy and greedy when others are fearful,” says Tony Avila, founder and CEO of Builder Advisor Group. “Many of the public builders are dramatically oversold. We saw this happen during the early days of the pandemic, too.”
Despite the decline in stock prices, Avila says the general appetite for merger and acquisition activity remains strong in the home builder space. Avila’s Builder Advisor Group has closed a deal in each month of 2025 and expects the pace to remain steady and active throughout the year.
“We are not seeing any pullback from the buyers. Buyers are looking for ways to grow,” Avila says. “Many of the buyers are focused on the long term and are looking to acquire strong companies with good management teams that will continue to deliver earnings for years to come.”
