Real estate stocks pummeled following Trump tariffs

Real estate stocks, already shaken by prolonged high interest rates, tumbled this morning with the rest of the market in the wake of President Trump’s rollout of tariffs. 

Residential and commercial brokerages, real estate investment trusts and other industry players saw their share prices tumble in line with a broader market drop in anticipation of soaring costs and constricted growth. 

President Donald Trump’s tariffs levy a baseline 10 percent tax on most U.S. trading partners, with more punitive levies coming to countries that respond in kind with tariffs of their own, including a tax on Chinese goods of over 50 percent. 

The impact of the new taxes will reverberate throughout the entire U.S. and global economy. Cost of goods for builders, who often rely on foreign materials, will increase, leading to supply restrictions and cost increases on residential and commercial construction. Before the full tariff list was unveiled yesterday, the National Association of Home Builders projected that the cost to build a single-family house in the U.S. would increase by as much as $10,000 under Trump.

Publicly traded residential brokerages like Compass, Anywhere Real Estate, Douglas Elliman, Re/Max and eXp Realty have all seen their stocks fall nearly 6 percent this morning, a slightly larger drop than the broader market indices like the S&P 500 and the Dow Jones, which were down around 4 percent at the time of publication. 

Real estate investment trusts took an even bigger dive today. Vornado is down over 9 percent at the time of publication, as is SL Green. Los Angeles-based Hudson Pacific Properties is down over 11 percent. 

Commercial brokerages Newmark and Jones Lang LaSalle, meanwhile, are both down over 6 percent.

Stephens analyst John Campbell, however, sees long-term upside in the residential market, which he believes will be a “safe haven going forward” for investors.

“Everything’s down right now,” he said. “A lot of these stocks are small- to mid-cap, which get the hardest when the market goes risk off.”

But he said the biggest influence in the housing market will be rates, which he said will go “lower, faster” with the market slowdown. 

He added that home building will take an immediate hit, meaning new home sales will be “a bit of laggard in the near-term,” while existing home sales, which don’t require new materials, should be buoyed by mortgage rate drops. 

Campbell saw long-term upside there, too, if the Trump tariffs work as the president envisions them. 

“Tariffs are going to mean reshoring,” he said. “Production facilities and manufacturing — those require capital investment.”

Many economists, however, don’t believe there will be a major reshoring of manufacturing in the wake of these measures. “This is not going to succeed at reviving U.S. manufacturing,” Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, told USA Today.

One of the few companies that has seen a bump this morning is Rocket Companies, which is coming off multiple multi-billion dollar deals for Redfin and Mr. Cooper. Rocket is up just under 1 percent at the time of publication — a relative boom this morning — likely due to its mortgage origination business, which could benefit from lower rates.