Ongoing immigration reform in the United States is expected to have a lasting impact on the housing market. While these effects won’t affect all regions equally, shifts in immigration policy could influence both the supply and demand of new homes nationwide.
Analysis by Zonda, NewHomeSource’s parent company, highlights the potential impact of recent policy changes, how builders are being impacted, and which markets could be most affected.
The purpose is not to take a stance on immigration reform, but to analyze its real-world economic and housing consequences.
See related: 3 ways the Trump Presidency May Affect New Construction in 2025
Context
Immigration has long been a key driver of household formation and economic growth in the United States. Changes to policy could impact the economy, workforce, and housing market. According to the American Immigration Council (AIC), there are nearly 50 million immigrants in the U.S., representing 15% of the overall population. The AIC estimates net immigration into the U.S. averaged 917,000 annually between 2010 and 2019 and rose to 2.7 million in 2024.
However, due in part to various tightening immigration efforts, the American Enterprise Institute projects net migration into the U.S. could turn negative in 2025 and 2026. This would mark the lowest sustained level of immigration in over 60 years.
In the context of the market, this could have a significant impact on the supply and demand of new homes across the country. NewHomeSource explores the potential impacts below.
Supply
Immigration reform could tighten the supply side of the housing market by reducing the availability of construction labor. Non-native born workers account for a significant share of the construction labor force. The Wall Street Journal estimates 30% of construction laborers are non-citizens, and in states like California, Texas, Florida, New York, Nevada, and Maryland, that share exceeds 25%, according to the National Association of Home Builders (NAHB).
See related: 3 Things Homebuyers Should Know About Labor Shortages in the U.S. Homebuilding Industry
If immigration slows, builders may struggle to find skilled labor, especially as many current workers age out of the industry without enough younger replacements entering the field.
Although Zonda’s recent survey of homebuilders shows that a labor crunch has not yet occurred, some builders report that trade workers are growing more cautious due to concerns about Immigration and Customs Enforcement (ICE) raids. That fear could reduce labor mobility, making it harder for projects to complete on time.
Any potential impact on the labor force due to immigration reform could have long-term impacts on the ability to build new homes.
See related: What it Means for New Homebuyers if Trump Declares a National Housing Emergency
Demand
Any changes in population flow due to immigration reform will also impact the demand side of the housing market. The share of foreign-born adult households that owned their home in 2023 was 58.5%.
A sustained decline in immigration could reduce the number of new households entering the U.S., which may lower housing demand over time. Additionally, policy-related uncertainty may discourage some recently immigrated households from buying, whether due to financial insecurity or hesitation to put down roots.
While demand is likely to be impacted in border states such as California, Texas, and Florida, markets such as New York, Washington, D.C., and Las Vegas also have a high share of foreign-born buyers.
Bottom Line
Whether it’s the labor needed to build homes or the households that fuel demand, immigration and housing are closely intertwined. Restrictive immigration policies could limit the workforce available for new-home construction and slow the pace of building.
In an already complex housing market, immigration reform adds another layer of uncertainty. Both builders and buyers may respond with caution, delaying decisions and contributing to a slower, more uncertain market.
