One of the biggest reasons the country isn’t building enough affordable housing has little to do with interest rates. It’s about who builds the homes, and what happens to prices when there aren’t enough of them.
When people talk about why housing is unaffordable, the conversation almost always lands on mortgage rates. Rates matter, but they’re only half the story. The other half is supply. We are not building enough homes, and one of the largest reasons is a shortage of the workers who physically build them. That shortage has gotten sharper in 2026, and it flows straight into the price of a new house.
This isn’t a political argument about immigration policy. It’s a look at how labor supply connects to home prices, because if you’re trying to buy, that connection affects what you’ll pay and what your options are. I bought a duplex and a small starter home before it, so I care about this from the buyer’s seat, not the builder’s.
If you’re new here, the foundation post is What Is House Hacking? This one is about the supply side of the market you’re buying into.
Who actually builds American homes
The construction trades lean heavily on immigrant labor, more than most people realize. Immigrants make up about 34 percent of all construction workers nationwide, according to the National Association of Home Builders, and that share climbs above 60 percent in the trades most central to homebuilding: drywall, roofing, and plastering. These are the hands-on jobs that turn a foundation into a finished house.
That concentration means anything that reduces the immigrant workforce hits residential construction harder than almost any other part of the economy.
What changed in 2026
The industry entered 2026 already short on workers and got squeezed further by stepped-up immigration enforcement. The Associated Builders and Contractors estimated the industry needed to attract roughly 349,000 net new workers in 2026 just to meet demand, a figure projected to rise to 456,000 in 2027.
At the same time, enforcement activity pulled workers off job sites. A working paper published by the National Bureau of Economic Research found that employment among likely undocumented immigrants fell about 4 percent on average in areas where ICE conducted raids, with construction the most affected industry at a 7.5 percent drop. A joint survey by the Associated General Contractors of America and the National Center for Construction Education and Research found that 28 percent of construction firms reported workforce disruptions tied to ICE activity within six months, and 10 percent lost workers directly to enforcement actions or even the rumor of a raid.
In parts of the country this brought homebuilding to a visible halt. Reporting from Minnesota, my own state, described new-home construction stalling after an immigration crackdown, with builders unable to find enough crews to keep projects moving.
How fewer workers become higher prices
The mechanism is simple supply and demand, running twice.
First, on labor itself. When there are fewer workers than jobs, the workers who remain command higher wages, and builders either pay up or leave projects unfinished. The NAHB estimated a $2.7 billion annual hit to the economy just from the longer construction times caused by the skilled-labor shortage. Those higher labor costs and delays get folded into the price of the finished home.
Second, and bigger, on the homes themselves. Fewer workers means fewer houses get built. When the country adds fewer new homes than it needs, the total supply stays tight, and tight supply holds prices up across the whole market, not just on new construction. Every home that doesn’t get built keeps competition high for the ones that already exist.
So the buyer feels it two ways: new homes cost more to build, and the shortage of new homes props up the price of existing ones too.
What a buyer can actually do about it
You can’t fix the national labor supply. What you can do is stop competing only in the part of the market where the squeeze is worst.
The affordability answer isn’t waiting for a flood of cheap new homes that the labor math says isn’t coming soon. It’s changing the kind of purchase you make. House hacking lets you buy in today’s tight market and have the property help pay for itself, which is how you make an expensive market survivable rather than waiting it out on the sidelines.
A few practical angles. Existing small multifamily properties, like duplexes and triplexes, sidestep the new-construction premium entirely and give you a built-in rental unit. A modest older starter home in a decent area is cheaper than a new build and can still carry a basement apartment or a rented room. And any purchase where a tenant covers a chunk of the payment insulates you from a market where prices aren’t falling.
Run a real listing through the free house hacking calculator to see what your true monthly cost would be once rent is helping. If you’re weighing an existing multifamily against renting, the rent vs. buy vs. house hack tool lays the paths side by side. And the readiness roadmap tells you how close you are to qualifying right now.
The point
A big share of the housing affordability problem is a building problem, and a big share of the building problem is a labor problem. In 2026 that labor shortage got worse, which keeps both new-home prices and overall supply working against buyers. You can’t change that from where you sit. You can change what you buy, so that a tight, expensive market becomes something you participate in with a tenant’s help rather than something you keep waiting to escape.
Sources
- Trump’s immigration crackdown is worsening the construction labor shortage — Fortune
- Immigration Reform Is Key to Building a Skilled Workforce — NAHB
- The US may already have a negative immigration rate. That’s bad for construction — Construction Dive
- New home construction stalls after immigration crackdown in Minnesota — CNN Business
- Construction workforce crisis deepens in 2026 — Construction Owners
I’m not a guru and there’s nothing to buy here. The tools are free. If you want more posts like this as I write them, subscribe on the blog, or if you’ve found a place and want a second pair of eyes on the numbers, send me the deal.
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