Trump's immigration crackdown could deplete the construction workforce and make housing more expensive

• Donald Trump has pledged to lead a mass deportation campaign once elected.
• That would create a major labor crunch for homebuilders, driving wages and costs higher.

Donald Trump's vow to crack down on immigration doesn't bode well for priced-out homebuyers.

The Republican presidential candidate has promised to lead the largest deportation campaign in US history if reelected. By one estimate, that could involve deporting up to 1.2 million people, though as many 11 million undocumented residents live in the country.

While there's room to debate the plan's feasibility, what's certain is that a sudden drain of the immigrant workforce could significantly hinder construction in the US, igniting deeper unaffordability for home market buyers.

A critical homebuilder workforce

"If we did see mass deportations, I do think it would have a chilling effect on the labor market," Jim Tobin, CEO of the National Association of Home Builders, told Business Insider.

He said immigrants are a critical component of the industry, as they help relieve a serious shortage of skilled labor. Foreign-born construction workers, who make up as much as a third of the sector's labor force, are often concentrated in specific trades required to build a home, such as plasterers and drywall installers, the Home Builders Institute reported.

"We consistently see government data showing that we are anywhere between 200,000 to 400,000 workers short in our industry and that lack of skilled labor slows down the pace of construction, drives up labor costs, and ultimately leads to higher home prices, and a slower pace of home building," Tobin said.

A 2022 George W. Bush Institute study found that US metros with the highest immigrant population growth scored the lowest construction costs.

Without the supply of these workers, history suggests housing costs are likely to rise.

According to a research paper released earlier this year, home prices were found to rise in counties impacted by an immigration crackdown that spanned from late 2008 to 2014. The US "Secure Communities" program led to the deportation of over 300,000 undocumented immigrants in that time period, it cited.

Given the pace of homebuilding, price effects were muted for two years after enforcement began, the study said. However, three years later, the average new construction property became 17% more expensive among tracked counties compared to the baseline.

That translates to a $57,300 jump compared to the average property price before the program's implementation.

"Three years after SC rollout, the average county has foregone the equivalent of an entire year's worth of additional residential construction: 2,423 fewer buildings are permitted, and 1,997 fewer newly constructed homes enter the market," the authors wrote.

Considering how wide-sweeping the Trump campaign's deportation effort could be, experts told BI that homebuilders would likely resort to wage hikes to attract domestic workers. These could be significant, given that the construction industry would be competing against other immigrant-dependent sectors.

According to Tobin, mass deportation would also require the industry to redouble its efforts in attracting new domestic interest in the trades.

"Whether that's kids coming out of out of high school, or adults that are looking for a new career, transitioning military that are coming out of the service. We would have to look at previously incarcerated."

What about demand?

Trump's campaign has implied that cracking down on immigration will help ease housing unaffordability by effectively removing one source of demand. It's a talking point recently made by Vice President candidate JD Vance, who blamed "millions of undocumented immigrants" for adding pressure on a supply-constrained housing market.

While research has suggested immigrant demand plays a role in influencing prices, economists generally doubt that this is a major driver.

Rents and home prices started surging in 2020 and 2021, at a time when net immigration inflows were close to the two-decade average, as tracked by the Congressional Budget Office.

Meanwhile, Trump's platform is also pushing another policy initiative that's unlikely to help housing costs: tariffs.

The candidate has pledged to raise duties on virtually all imports to the US, raising them as much as 60% on Chinese imports.

"If you're going to add tariffs onto building materials, that cost is just going to be passed along to the homeowner or the renter," Tobin said, citing that there's a lack of evidence that tariffs will meaningfully increase production in the US. He pointed to a 15% tariff on Canadian softwood lumber that has failed to do this.