- Posted onAugust 28, 2025
- By Jessica I. Marschall, CPA, ISA AM The Green Mission Inc. and GM-ESG
1. Current State of the Building Market
The housing market in the United States is navigating a difficult landscape. Existing home sales in June 2025 sank to their lowest level in nine months, declining by 2.7 percent to an annualized rate of 3.93 million units. Inventory of existing homes has recovered somewhat, now reaching approximately 4.7 months of supply, the highest level since May 2020. Nonetheless, inventory continues to fall short of pre-pandemic norms (Kiplinger).
Home price growth has decelerated, with the S&P CoreLogic Case-Shiller National Home Price Index rising only 2.3 percent year over year, and recording a 0.3 percent decline month over month (Kiplinger).
Meanwhile, sales of new homes in June inched upward by just 0.6 percent, even as builders offered incentives such as mortgage rate buydowns to offset mortgage rates hovering near 7 percent. The median price of a new home fell 4.9 percent year over year to approximately $401,800 (Kiplinger).
New construction activity is uneven. Single-family housing starts are slowing, as reflected in a fourth consecutive monthly drop in permits, a signal that future supply may tighten. In contrast, multifamily starts surged by 30 percent, responding to rising rental demand (Construction Dive).
Affordability remains a critical challenge. Many first-time buyers are being priced out. By April 2025, a typical homebuyer needed a six-figure income, roughly $117,000, to qualify for a mortgage in many states. That represents an increase of approximately 50 percent compared to five years earlier (Kiplinger). The median age of first-time buyers has risen to 38, and their share of the market has declined to just 24 percent, the lowest on record (Kiplinger).
The housing market is constrained by high mortgage rates, affordability challenges, cautious builders, and uneven construction activity across sectors.
2. Rising Material Costs and Tariff Pressures
Construction costs are increasing under mounting pressure from tariffs and supply chain disruptions. In May 2025, construction input prices rose 0.2 percent due to spikes in the costs of iron, steel, copper, and aluminum. On a year over year basis, overall input prices were 1.3 percent higher, and 1.6 percent higher in nonresidential construction. On an annualized basis through May, costs climbed 6 percent (Construction Dive).
These May figures do not yet incorporate the impact of the latest tariff hike. On June 4, 2025, the administration doubled tariffs on steel and aluminum imports from 25 percent to 50 percent, effective immediately. This move is expected to further inflate material costs and exacerbate supply chain disruptions (Time).
Industry sources confirm the strain. Builders and developers are reporting significant increases in project budgets. One warehouse project in Newark experienced an 8 to 10 percent increase in steel costs, leading to a $2 million budget overrun. Another developer in the Washington, D.C. area faced a projected 15 percent increase in steel costs for a $100 million warehouse project (Business Insider). Homebuilders are estimated to be absorbing approximately $9,200 in additional cost per home due to tariffs and rising material prices (Investopedia).
Several factory and commercial projects have been halted or revised due to inflated material and equipment costs that result from tariffs (Wall Street Journal).
3. A Strategic Opportunity: Secondary Market for Building Materials
Amid these challenging times, an opportunity emerges through the strategic use of secondary market building materials. The secondary market includes reclaimed, recycled, gently used, or surplus materials. If residential and commercial builders could purchase such materials at 25 to 35 percent of the cost of new equivalents, there is a compelling economic advantage.
Our team at The Green Mission Inc. and GM-ESG values building materials on the secondary market each day and sometimes values are lucky to match even 45-50% of the cost of new materials. Values are especially present with high-end windows, doors, appliances, lighting, fixtures, and cabinetry. A set of Wood-Mode cabinetry sometimes appraises at only 20-25% of the cost of new materials and even higher end contemporary cabinetry like Poggenpohl appraises for less than 50% of the cost new, even in “open box” or like-new condition.
Builders could then mark up these materials reasonably for resale or inclusion in projects, while still offering prices below the prevailing market rate. This model allows them to retain a margin, pass savings to clients, and reduce total construction costs in a meaningful way.
Potential Benefits:
- Lowering Home Prices
By reducing material input costs substantially, builders can lower the sales price of new homes. For example, materials often account for 20 to 30 percent of total construction cost. If builder savings from the secondary market were passed through without eliminating profit, they could reduce home prices by several percentage points, improving affordability.
- Stimulating Buyer Interest
In a time of elevated mortgage rates and economic uncertainty, even modest reductions in selling price may incentivize hesitant buyers. Lower home prices could draw back first time buyers and make new construction more accessible.
- Supporting Sustainability and ESG Goals
Using secondary materials aligns with environmental goals by reducing extraction of virgin resources, lowering carbon footprints, and promoting circular economy principles. This strengthens builder credentials under GM-ESG’s mission and can be integrated into financial reporting especially at the corporate level where ESG interests prevail.
- Resilience Against Tariff Driven Volatility
The secondary market is inherently less sensitive to global supply shocks and tariff cycles. Builders who tap into local reclamation networks, salvage yards, deconstruction partners, and surplus inventories can mitigate volatile price swings while gaining procurement flexibility.
4. Implementation Considerations and GM-ESG Advocacy
Operational Pathways:
- Develop Supply Channels: Build partnerships with deconstruction firms, demolition contractors, architectural salvage operations, and surplus resellers. If you need to know who to call, reach out and we can connect you with the best and brightest in the industry in both the US and Canada.
- Quality and Specification Control: Establish rigorous inspection, certification, and grading systems to ensure safety, structural integrity, and compliance with building codes.
- Marketing and Transparency: Promote sustainability benefits and cost savings to potential buyers and stakeholders through clear messaging, data transparency, and green certification where possible.
- Pilot Projects: Launch demonstration homes or commercial builds that showcase feasibility, craftsmanship, and affordability using secondary materials, while collecting performance data and consumer feedback.
The Green Mission Inc. and GM-ESG’s Role:
At The Green Mission Inc. and within our new company GM-ESG’s framework, we advocate for policies, incentives, and industry standards that support the integration of secondary materials. We recommend:
- Incentive programs such as tax credits or rebates for developers who utilize a defined percentage of reclaimed materials.
- Building code reforms that create certification pathways for safe and compliant reuse of materials.
- Training programs for builders and contractors in deconstruction, reuse best practices, and secondary market procurement.
The current building market presents a confluence of affordability challenges, elevated mortgage rates, constrained supply, and rising construction costs that are being amplified by tariffs and policy uncertainty.
An innovative pathway exists through the secondary materials market. By sourcing high quality reclaimed and surplus materials at 25 to 35 percent of new cost, builders can reduce construction expenses, maintain margins, and deliver below market price homes to eager buyers.
This strategy aligns with both economic and environmental objectives. It advances both TGMI and GM-ESG’s values of sustainability, affordability, and resilience. Industry players, policymakers, and developers should embrace secondary material channels as part of a comprehensive response to today’s structural and financial pressures in housing and building markets to decrease landfill usage and increase both the gross and profit margins.
