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

• Donald Trump has pledged to lead a mass-deportation campaign if elected.
• That could create a major labor crunch for homebuilders, driving wages and costs higher.
• Here's how Trump's plans could hit the workforce and make homes more costly for buyers.

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 as 11 million people are living in the country illegally.

While there's room for debate about the plan's feasibility, some are arguing that a sudden drain of the immigrant workforce could significantly hinder construction in the US, putting more strain on an already troubled housing market.

A critical home-building workforce

"If we did see mass deportations, I do think it would have a chilling effect on the labor market," Jim Tobin, the 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, 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.

This is an argument the Trump camp has pushed back on. In a recent New York Times interview , vice-presidential candidate JD Vance argued that there are still plenty of US workers capable of filling those jobs.

"This is one of the really deranged things that I think illegal immigration does to our society is it gets us in a mind-set of saying we can only build houses with illegal immigrants, when we have seven million — just men, not even women, just men — who have completely dropped out of the labor force," he said.

"People say, well, Americans won't do those jobs," he continued. "Americans won't do those jobs for below-the-table wages. They won't do those jobs for non-living wages. But people will do those jobs, they will just do those jobs at certain wages."

Study findings

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

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

A research paper released earlier this year found home prices rose in counties that cracked down on immigration between late 2008 and 2014. The "Secure Communities" program led to the deportation of over 300,000 people living in the country illegally during that time period.

The study said that given the pace of homebuilding, the effect on construction costs was muted for two years after enforcement began. However, three years later, the average new construction parcel was 17% more expensive in counties that had implemented the Secure Communities program 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 study's authors wrote.

Considering how 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.

Tobin said mass deportation would also require the industry to redouble its efforts to attract new domestic interest in the trades.

He said that would include "kids coming out of out of high school," adults looking for new careers or transitioning from military service, and people who were "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. Vance has also used this talking point, blaming " millions of undocumented immigrants " for adding pressure on a supply-constrained housing market.

While research has suggested that immigrant demand influences prices, economists generally doubt that this is a major driver of price increases.

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.

Trump has pledged to raise duties on virtually all imports to the US — including raising tariffs 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. He added that there's a lack of evidence that tariffs will meaningfully increase production in the US, pointing to a 15% tariff on Canadian softwood lumber that's failed to do so.