Deporting Undocumented Workers Will Make Housing More Expensive

The effect will be most pronounced in Texas and California

If President Trump makes good on his promise to deport millions of undocumented workers, homes will become substantially more expensive.

Trump's mass deportation plan faces hurdles. Logistics alone present challenges—not least, navigating complex diplomatic relationships with receiving countries.

But make no mistake: enforcement is ramping up dramatically. ICE arrested nearly 600 people daily in the first three weeks of February. That’s more than double the average during Biden's administration.

Mass deportations will severely disrupt the construction industry

The chart below shows the size of various homebuilding occupations. The vertical height of each bar represents the number of people employed in each occupation, while the horizontal width represents the proportion of each occupation comprised of undocumented workers, according to estimates from the Center for American Progress. The size of each block therefore represents the number of undocumented workers across occupations. Mass deportation would affect construction laborers most intensely.

Higher wages for American workers?

One purported argument in favor of deportations is that American workers would benefit from higher wages.

But consider this precedent: in 1964, following the termination of the Bracero Program—which allowed Mexican workers to come to the US to work in agriculture—American farm workers didn't see their wages rise. Instead, farmers adopted mechanization and crop substitution.

Moreover, research shows that immigrant workers often complement rather than compete with native-born workers. The two fill different labor market niches. In fact, foreign workers can actually increase productivity and wages for some domestic workers.

And while removing undocumented workers might increase wages for some American workers, these gains would be outweighed by broader negative effects: increased housing costs, reduced housing supply, construction delays, and overall economic inefficiency.

Which parts of the country would be most affected?

The states most at risk of higher construction costs due to mass deportation are those where there is a lot of construction activity and a high proportion of undocumented workers. By this accounting, two states in particular stand out.

Texas and California (and, to a lesser extent, Florida and New York) rely heavily on undocumented labor, with Texas alone employing an estimated 400,000 undocumented construction workers—nearly half of its workforce.

But the effects would be widespread. In New York City, immigrants make up 63% of the construction workforce, with approximately 40% being undocumented.

Don't look at large homebuilders—look at who they hire

Large national homebuilders like PulteGroup and Taylor Morrison have publicly stated that they have not yet seen any impact from immigration enforcement but that—should deportations materialize—their businesses will be impacted.

For example, in their Q4 2024 earnings call on January 30, 2025, PulteGroup noted:

“To the extent that there are deportation activities, there’s no question there’ll be less labor available, and that will have an impact on all wage rates, but we’ll deal with that as it becomes more clear.”

But National homebuilders like Pulte aren't necessarily the right place to look for the impact of fewer immigrant workers.

That's because they don’t hire undocumented workers directly, but rather via the subcontractors and labor brokers that provide labor for construction projects. This layered system allows the homebuilders to maintain compliance with immigration laws while distancing themselves from the undocumented workforce further down the supply chain.

Subcontractors often rely heavily on undocumented workers to fill critical roles in trades like framing and roofing. If deportations were to occur, these intermediaries would face severe labor shortages, which would ripple up the supply chain to homebuilders in the form of higher costs and delays.

The Labor Component in the Cost of Housing

We might ask how much of a home's price is a function of its labor costs. Aren’t other factors—like the price of land—more important?

Labor typically accounts for 20% to 40% of total construction costs. Construction costs represent 60% to 70% of a new home's sale price. On average, the National Association of Homebuilders estimates that labor costs directly influence around 25% of the final price of a new home.

And it’s not just about new homes. Mass deportations would cause bottlenecks, thereby slowing construction, curtailing supply, worsening the supply-demand imbalance, and driving up the cost of existing homes, too.

Some specialty trades will be acutely affected

Mass deportations will affect more than just new home construction—they'll also hit remodeling costs.

While new construction often dominates housing discussions, remodeling represents an essential expense for American homeowners. 60% of U.S. homes were built before 1980; renovation demand continues to climb steadily.

The remodeling sector already faces severe labor shortages, and it’s set to worsen: Zonda projects renovation labor supply to fall 15% below demand by 2030 as retirements outpace new workers. Deportations would intensify this crunch.

Carpenters and brick masons/stone masons are staffed to a substantial extent by immigrants, and are already facing steep labor shortages. Those are two areas where mass deportations would bite especially hard.

A better way

To be fair, the immigration situation today is more complex than what some prior administrations had to contend with.

For example, President Obama deported enough migrants to earn the nickname “Deporter-in-Chief”, but most of those deportations happened at the border and were comprised primarily of single Mexican men seeking work. Those arriving today are refugees from troubled Central American countries. They cannot be turned back without a more lengthy process.

Still, the majority of migrants that Obama deported from the interior of the country had criminal records. By contrast, Trump is going after all migrants. By targeting all undocumented workers regardless of criminal status, Trump is both overwhelming the courts—delaying the very process he aims to expedite—while removing critical workers from our economy.