Immigration and Housing: Supply, Demand, and Characteristics

Immigrants play a significant role on both the supply and demand sides of the housing sector, which is a major component of the U.S. economy. On the demand side, immigrants are an increasingly important source of new household formation in the United States, thereby increasing the demand for new housing units. Immigrants currently drive more than one-third of the growth in housing demand in the United States. Within a few decades, immigrants are expected to be responsible for the bulk of the net growth in households in the United States, which will make immigration an even more important source of demand for new housing construction.

Immigration’s growing importance to housing demand means that over the coming decades, immigrants will take on a more prominent role in shaping the nation’s housing stock. Today, immigrant-headed households are more likely than households with a U.S.-born head to rent their homes (49 percent versus 33 percent), and are more likely to live in apartment buildings and smaller housing units. The fact that immigrants are more likely to live in urban areas explains about one-third of the homeownership gap and likely contributes to immigrants’ tendency to live in smaller housing units.

On the supply side of the housing market, immigrant labor is essential to the construction workforce, the industry category most closely associated with homebuilding. Today, immigrants make up nearly 25 percent of all construction workers, up from about 16 percent in 2000. Trends over time suggest that immigrants help the housing industry respond more flexibly to changes in market demand. Immigrants more quickly entered the housing workforce than U.S.-born workers in boom years, but also lost jobs faster during the recent recession.

Immigrants’ growing role in supplying construction labor and driving demand for new housing units make immigration an important contributor to U.S. economic prosperity. Looking ahead, these contributions will be critical to the housing industry’s future.