Housing transactions happen for a lot of reasons that real estate professionals are intimately familiar with—new job, new baby, new marriage. In the aggregate, though, most of these events can be classified as “household formations”—in simple terms, a new family is formed, and that family (usually) needs a new place to live.
According to Harvard’s Joint Center for Housing Studies (JCHS), a precipitous drop in immigration is threatening to knock the bottom out of household formation, with “broad implications” for the housing market in the next two years.
“Estimates suggest that current immigration cutbacks are on track to lower the pace of household growth from recent immigrants by another 420,000 households per year in 2026 and 2027,” JCHS Senior Research Associate Daniel McCue wrote in a recent blog post.
A year ago, JCHS researchers offered a multi-pronged prediction of how changes in immigration could potentially impact household formations and homeownership rates, with three scenarios—a “base” scenario, a “high trajectory” and a “low trajectory, with varying levels of growth based on several factors including immigration.
The country saw a little over 10 million new household formations between 2010 and 2020, according to JCHS, and the low trajectory projection called for a little under 7 million between 2025 and 2035.
But in early 2026, JCHS updated its model to emphasize the low trajectory path based on slowing immigration, dropping its estimation of new homeowner households by about 96,000 per year. Households headed by immigrants contributed roughly three-quarters of housing demand growth since 2010, according to JCHS, and skewed younger toward people in their prime homebuying years.
Real estate professionals have warned that a significant pullback in immigration will likely impact housing, focused largely on new construction, where immigrants make up an outsized proportion of skilled labor. The Trump administration has claimed its policies will bring down housing costs.
But industry leaders warned that immigration changes could result in a disruption in sales and demand, with the National Association of Hispanic Real Estate Professionals (NAHREP) describing “aggressive” immigration enforcement in 2025 as a “destabilizing force” for housing demand and confidence.
Texas Realtors® found that 27% of prospective immigrant and foreign buyers in 2025-26 who couldn’t close on a home said they were prevented by immigration laws (even as the total number of foreign buyers ticked up).
The center’s latest update is based on the fact that most immigrant families form new households around two years after families enter the country—meaning the slowdown from a near-total cutoff of immigration in the second Trump administration will be felt strongest from this year into next year.
Looking back at 2024, the majority of new household formations from immigrants (totaling 702,000) were from families who came to the country in 2023 and 2022 (with around a third having arrived that same year). Immigration surged from 2021 to 2024, meaning that the last couple years were propped up by these “relatively large cohorts,” JCHS said.
“All of this suggests that the negative impacts of the 2025 immigration drop on household growth were only partially felt in 2025,” McCue wrote. “(T)his also means that the effects of the downturn in immigration in 2025 will be felt more deeply on household growth levels in 2026 and 2027 and could combine with additional negative effects if immigration drops even further in 2026.”
This new outlook lowers the rate of household growth by around half a million per year, according to JCHS.
“This is absent any change in native-born household growth which is also slowing due to structural, long-term factors,” McCue wrote. “A slowdown of this magnitude would mark a significant shift in near-term household formation trends with broad implications for housing markets.”
