Households headed by immigrants have accounted for roughly three-quarters of housing demand growth since 2010, but a new Harvard analysis suggests that trend may be ending—with significant implications for housing markets across the country.
The Joint Center for Housing Studies at Harvard University (JCHS) released revised projections forecasting 1.7 million fewer households in the U.S. by 2035, which is roughly half of its historical average. The results are market-shifting and should have all real estate professionals sitting up and paying attention.
Harvard’s baseline scenario assumes about 870,000 immigrants annually over the next decade, matching the average over the past 30 years. That adds about 8.6 million new households (as well as new housing demand). But in the JCHS’s low-immigration scenario—just 420,000 immigrants coming in per year through 2035, total new households drop to 6.9 million, or a 20% decline overall over the next decade.
What’s more is that nearly 60% of the household reduction hits the under-45 crowd who are also in their prime home-buying years. Immigrant populations tend to skew younger, but with a reduction in those numbers, it reduces a notable demographic share of younger workers who might form households and enter their prime earning years.
The revision comes on the heels of declining cross-border migration and an uptick in arrests and deportations due to the Trump administration’s hardline immigration policies. According to Pew Research Center, the U.S. immigrant population fell by 1 million people in the first half of 2025.Â
Both ends of the housing market—purchases and rentals—will feel the hit.Â
Homeowner household formation will lower by 88,000 to 99,000 households annually under Harvard’s low-immigration projections over the next decade. Meanwhile, renter households will see formation fall by 74,000 to 86,000 per year.
If you’re betting on millennial and Gen Z buyers and renters to fuel the housing market in the near future, these numbers matter. Because younger people are less likely to own and the average age of first-time homebuyers keeps trending older—now 40, according to the National Association of Realtors®—the older demographic mix doesn’t move the needle.
The twist is that homeownership rates aren’t expected to budge much, potentially gaining by 0.1 to 0.2 percentage points under the low-immigration scenario compared to the baseline over the decade.Â
What this means for builders
The construction industry has already been calibrating to lower household formation expectations. After years of underbuilding following the 2008 financial crisis, builders ramped up production during the pandemic, particularly in Sun Belt markets where land and regulatory environments favored new development.
Lower immigration levels could leave some markets oversupplied, particularly in areas that built aggressively anticipating continued population inflows. Developers may shift focus toward renovation and retrofit projects rather than new construction, or redirect efforts toward senior housing to capture the still-growing older demographic.
All combined, that doesn’t help solve the dearth in housing supply much of the U.S. currently faces. Currently, the new-construction market is short 1.5 million units, mostly due to high costs, regulatory hurdles, labor shortages (especially given that immigrants make up a large share of construction workers) and scarcity of affordable land/lots for development, according to the National Association of Home Builders (NAHB).
Immigration vs. housing affordability debate
The Trump administration has blamed illegal immigration for skyrocketing housing costs. Reduced housing demand might seem like it’ll help affordability, but the relationship isn’t so cut and dry.Â
While less competition for housing could ease price pressure in some areas, immigration restrictions reduce the labor force needed to build new homes, putting builders even further behind.Â
Builders need to hire approximately 723,000 workers per year to keep pace with new-home demand, according to NAHB analysis of BLS data and projections.
Fewer construction workers means slower construction, higher labor costs and less supply. This could potentially offset any demand-side affordability gains.Â
Harvard’s revised figures suggest policymakers should consider these implications as they move forward on immigration policy. Household formation drives economic activity, tax revenue and communities. A substantial reduction in growth rates could have the opposite desired effect on the economy—and housing markets across the country.
