Zonda’s chief economist never thought Trump, the only real estate mogul-turned-president, would place tariffs on building materials when housing is already so unaffordable. She was wrong

• The housing world is in for another lackluster spring selling season as tariff fears and more weigh on homebuilders and would-be buyers. The wealthy are the only silver lining in the housing market—and even that may change.

Zonda chief economist Ali Wolf felt optimistic about one thing in particular when President Donald Trump was elected: He understood real estate. So when homebuilders asked her about tariffs in January, she told them she couldn’t imagine a real-estate-savvy president would place taxes on building materials when housing is so unaffordable for many Americans, something he promised to fix on the campaign trail. Then, in March, Trump did exactly that, placing tariffs on imported steel and aluminum. Tariffs on imported lumber could come in April.

“I was wrong,” Wolf told Fortune.

In a matter of months, Wolf went from feeling somewhat hopeful about the housing market when it comes to builders, buyers, and sales, to gloomy. She still believes the housing world is fine. It won’t burst into flames. But she does have her concerns. And the policy whirlwind America is caught in is mostly to blame. 

Zonda’s surveys routinely ask builders what’s holding buyers back. In March, builders said affordability, which has been the top answer for a while because home prices increased 45% in the past five years and mortgage rates are a far cry away from their pandemic lows. The next answer: Would-be buyers are sitting on the sidelines because there is no rush to buy. The third answer, however, is one Wolf hasn’t seen in a very long time: Consumers are concerned about the economy, jobs, and their visa status. 

“It’s freaking people out,” Wolf said of uncertainty. 

Earlier this month, the S&P 500 slipped into correction territory on the back of on-again, off-again tariffs, and there are mass layoffs occurring in the federal government, so consumer sentiment is plummeting as a result. In housing, it’s tariff and immigration policy that keeps people on their toes. 

“We’re very worried about tariffs,” Wolf said, because they can induce higher costs and have done so in the past. 

Tariffs are a tax on imported goods, so builders see an extra cost on products they tend to purchase from other countries. If they shift their supply chains to buy locally, it’ll cost them, too, because goods produced in the U.S. aren’t as cheap. In either scenario, the expectation is builders will pass on the additional costs to buyers. So far, the Trump administration has either threatened, plans to, or placed tariffs on lumber, aluminum, and steel—all used in the construction of homes. More than half of builders in the latest survey said the total cost of building a home is higher than last year. And still, there is a fear that tariff pain might not be totally felt until next year, potentially in a worsening economy, Wolf said. 

When it comes to immigration, builders have not seen a substantial change to their construction workforce at this point, despite promises of mass deportations made by the Trump administration. However, they are nervous and are monitoring the situation. Still, it goes beyond labor. Anyone worried about their immigration status either now or in the next four years will think twice about buying a home, she pointed out. In a recent earnings call, $30 billion homebuilder Lennar mentioned consumer confidence slipped, and that it was keeping an eye on any impact tariffs or deportations might have on its bottom line.

All things considered, it appears the housing market is set for another lackluster spring selling season. 

The only silver lining is the wealthy, and even that may change. High-end buyers who can purchase homes in cash haven’t felt the same pain of high mortgage rates. Luxury homebuilder Toll Brothers recently mentioned in an earnings call more than 70% of its business is from wealthy move-ups and empty nesters with years of home price appreciation, and the rest are rich millennials.

But they could pull back because of all the uncertainty and malaise. “They have the money,” Wolf said. “Their money has not gone away. Their home is still worth a lot. Their stocks are still worth a lot. But what has changed is just their sentiment on the market.”

The housing market has been at a post-pandemic standstill—and in a perfect world, lower mortgage rates, a predictable stock market, and confident consumers would fix it, Wolf explained.

This story was originally featured on Fortune.com