Home Depot, Lowe’s rival files Chapter 11 bankruptcy

While they have been a moving target, President Donald Trump’s tariffs have raised the cost of building a new house.

“The new tariffs could increase builder costs anywhere from $7,500 to $10,000 per home,” Rob Dietz, chief economist at the National Association of Home Builders told CNBC, citing estimates from U.S. homebuilders. Last year, the NAHB estimated that every $1,000 increase in the median price of a new home prices out roughly 106,000 potential buyers.

So far, the biggest impact has been felt in lumber prices, “which are expected to total about $4,900 per home on average, according to Leading Builders of America, the trade group representing most of the nation’s publicly traded homebuilders,” the website shared.

While the United States does produce some lumber, about a third of all the wood purchased for homebuilding comes from Canada. Domestic lumber producers generally raise their prices to match import prices.

Rising lumber prices damage the entire home construction industry, and a lack of certainty adds complexity to the home-building process, Steve Martinez, president of Tradewinds General Contracting in Boise, Idaho, shared with the NAHB.

“Our contracts are all fixed price — meaning that from the time we bid a project to the time we start to the time we order the materials, prices could change drastically,” Martinez explained. “But we are trying to preorder as much material as we can.”

While rising and volatile prices impact major players like Home Depot, they are better able to mitigate and predict the impact than smaller retailers.

North American Builder’s Supply, a Home Depot and Lowe’s rival based in Illinois, has filed for Chapter 11 bankruptcy protection.

The company has remained open and plans to reorganize and continue its operations, according to data shared by RK Consultants on X, the former Twitter.

“North American Builders Supply, Inc., a Yorkville, Illinois-based building materials supplier, filed for Chapter 11 protection on December 3, 2025, in the Northern District of Illinois. The company reported between $500,001 and $1 million in both estimated assets and liabilities,” according to the consulting firm.

The filing lists numerous trade creditors and lines of credit among its largest unsecured claims. Major unsecured creditors include Bluetape, Inc. ($503,219), Kapitus Servicing, Inc. ($149,596), and an unsecured portion of a claim from Central Bank Illinois ($94,131).

• North American Builders Supply reportedly filed for bankruptcy protection — a Chapter 11 filing on December 3, 2025.
  Source: RK Consultants

• The filing appears to stem from financial distress, including claims and a lawsuit from creditor Proventure Capital LLC.
  Source: Trellis Law

• The legal complaint shows Proventure Capital alleged unpaid obligations by North American Builders Supply (and/or one of its officers), indicating the bankruptcy involves creditor pressure and litigation.
  Source: Trellis Law

• Because the bankruptcy protection is Chapter 11, the company may be attempting reorganization rather than outright liquidation (at least initially).
  Sources: RK Consultants, Pacer Monitor

The bankruptcy was also reported by the Daily Distressed Asset Central, which provided a case number, 25-18572, in the Illinois Northern Bankruptcy Court. That report shows that the Chapter 11 filing was voluntary.

Large home improvement and builder supply chain have more ability to mitigate tariffs than their smaller rivals.

In its third-quarter earnings call, Home Depot Executive Vice President of Merchandising William Bastek commented on tariffs.

“Over 50% of our inventory is not part of tariffs and is obviously sourced domestically. So we’ll continue to watch that and look forward to the Q4,” he shared.

In some cases, Home Depot can simply mitigate the tariff-related price increases by not offering as many discounts.

“If you think about our job, which is to help impact some of the tariff pressure, being a little less promotional in a couple of those garden areas was just the nature of what we did in Q2. And so again, 4 of those 5 categories that we saw an impact from were related to some of the lower-ticket garden projects,” he shared during the chain’s second-quarter earnings call.

Lowe’s CFO Brandon Sink talked about how tariffs impacted his company’s inventory.

“Inventory ended Q3 at $17.2 billion, down approximately $400 million versus prior year. This net decrease also reflects the inclusion of inventory from recent acquisitions of approximately $600 million and higher tariffs,” he shared during Lowe’s third-quarter earnings call.

He noted that this is an ongoing moving target problem the company is monitoring.

“We continue to look at tariffs, those ramp here in Q3, we’re expecting that also to continue ramping in Q4, and the wrap to affect the first half of the year. So managing through that and trying to understand how that impacts both sales margin and operating margin going forward,” he added.

“Canadian lumber had climbed 14.5%. Concrete prices jumped 8%. Household appliances were expected to rise by as much as 20%. Suddenly, the question wasn’t how to build affordably — it was whether starter homes could be built profitably at all,” Cotality/CoreLogic shared.

“Yet without new housing supply, existing home prices will only keep rising, pushing affordability further out of reach.”

As someone currently building a new house in Florida, there’s risk to both the builder and the buyer. When you sign a contract to build a new house, you lock in the price.

If material costs drop, the builder makes more money, and you have overpaid. Should they go up, the builder risks losing money, which means that in volatile times, builders generally add in extra margin, which pushes costs up for homebuyers.

“Already, the average cost of new construction in the U.S. is $422,000. Adding in potential material cost increases from the tariffs would add between $17,000 and $22,000 to that price tag,” the Cotality data showed.

Related: Lowe’s announces free offer for customers amid struggles

This story was originally published by TheStreet on Dec 4, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.