The sharp increase in U.S. home prices has been one of the most remarkable economic events in recent memory. As shown in Figure 1, for example, the Case‐​Shiller U.S. National Home Price Index indicates that home prices in August 2021 were almost 20 percent higher than in August 2020, and most experts believe that prices will continue to rise in 2022, especially in the nation’s hottest markets. This trend has unsurprisingly sparked intense debate among pundits, academics, and policymakers about the factors driving the increase in prices and how policy can help American homebuyers weather it.

Explanations of the current home price dynamics tend to focus on a handful of demand‐ and supply‐​side considerations. Following the onset of the COVID-19 pandemic, unprecedented U.S. monetary expansion and higher interest in larger houses, especially in less densely populated areas, boosted housing demand. On the supply side, frequently discussed causes include local land‐​use regulations (e.g., zoning), labor shortages, and higher material costs—each of which can limit the ability of the national housing supply to keep up with surging demand.

In this paper, we explore one potential determinant of construction material prices in the United States: trade policy. Figure 1 shows that in August 2021, construction material prices were 27 percent higher than in August of the previous year, and several analysts have highlighted how U.S. trade restrictions may have contributed to this trend. For example, Scott Lincicome shows that numerous intermediate inputs (e.g., steel nails) and finished goods (e.g., washing machines) in the housing construction sector are subject to U.S. trade protection. In November 2021, the Biden administration doubled “trade remedy” duties on Canadian lumber imports, despite homebuilders’ repeated requests to eliminate these and other protectionist measures that they say increase U.S. construction costs.

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