Shock HUD Claim: Immigrants Drove Rent Surge

Immigration adds households; an inelastic housing supply turns those households into a price spike — and that distinction, ignored in most political arguments about the Biden-era migrant surge and housing costs, is the key to understanding what the evidence actually shows.

At a Glance

A 2025 HUD report found that the foreign-born population grew by six million between 2021 and 2024, and attributed to that influx two-thirds of national rental demand growth and, in California and New York, 100 percent of all rental price increases.
Harvard’s Joint Center for Housing Studies directly contests the causal framing, noting that rent and home-price growth slowed substantially after immigration ramped up in 2022 — the opposite of what a dominant demand-shock story would predict.
Academic research going back to Albert Saiz’s 2007 benchmark study consistently finds that a 1 percent increase in a city’s immigrant population correlates with roughly a 1 percent rise in rents — a real but modest effect that amplifies when supply is constrained.
The Economic Policy Institute and other analysts argue the root cause of the affordability crisis is a dysfunctional supply side — restrictive zoning, slow permitting, high construction costs — that converts any demand increase, immigrant or otherwise, into sharply higher prices.
Both framings contain empirical truth: immigration added measurable demand pressure in tight markets, but the severity of the price response is primarily a function of supply inelasticity, not the volume of arrivals alone.

What the HUD Report Actually Claims

The Trump administration’s Department of Housing and Urban Development released its “Worst Case Housing Needs 2025” report with an unusually pointed political frame. HUD Secretary Scott Turner declared that Biden’s “open borders” policies were a primary driver of housing unaffordability, and the agency’s press release cited a striking figure: in California and New York, the foreign-born population increase accounted for 100 percent of all rental price growth and more than half of all growth in owner-occupied housing during the 2021–2024 period. Nationally, the foreign-born population accounted for roughly two-thirds of rental demand growth.^[1]

The report also estimated that without the migrant surge, approximately 784,000 fewer households would have formed over that period — a counterfactual that, under conditions of tight inventory, translates directly into lower price pressure.^[2] These are not trivial numbers. Six million additional foreign-born residents over three years represents the largest such increase over a comparable period in American history, and basic supply-and-demand logic holds that adding millions of household-forming individuals to a market already short on inventory will move prices upward. The HUD findings, whatever their political packaging, are rooted in a real and well-documented mechanism.

The Timing Problem Harvard Raises

The Harvard Joint Center for Housing Studies offers the sharpest methodological challenge to the HUD narrative. Its analysts point out that the steepest acceleration in rents and home prices occurred in 2020 and 2021 — precisely when immigration rates were at their lowest, suppressed by pandemic-era border restrictions. When immigration surged from roughly 990,000 annually in 2020–2021 to an estimated 2.7 million in 2022 and 3.3 million in 2023, rent growth and home-price appreciation actually decelerated.^[7] If immigration were the primary driver of the cost spike, the chronology runs backward.

This timing argument is significant and specific — it is not a vague ideological rebuttal but a direct challenge to the causal chain the HUD framing requires. It does not prove immigration had no effect on housing costs; it does suggest that the largest price increases were driven by something that predated the surge. The pandemic-era factors — remote-work demand shifts, historically low mortgage rates, disrupted construction supply chains, and a decade of underbuilding — generated the conditions under which any subsequent demand increase, immigrant or domestic, would register as acute price pressure.^[10]

The Supply Inelasticity Problem: Why Both Can Be True

The most intellectually honest reading of the evidence is that the immigration-housing debate is largely an argument about the wrong variable. The Economic Policy Institute states the case plainly: increased housing costs are caused not by immigration per se, but by the failure of U.S. housing markets to meet new demand with new supply rather than higher prices.^[21] The mechanism is well-established in urban economics. When zoning laws restrict density, permitting timelines run years rather than months, and construction labor is expensive and scarce, the supply curve is nearly vertical — meaning any rightward shift in demand, from whatever source, resolves almost entirely through price rather than quantity.

This is why the 2020–2021 price spike, which occurred with minimal immigration, was so severe: the supply side was already broken. When immigration then accelerated in 2022–2024, it added genuine demand pressure to markets that were still not building fast enough to respond. Academic research is consistent on the magnitude of immigration’s demand effect in isolation: Saiz’s 2007 Journal of Urban Economics study found a roughly 1-for-1 relationship between a city’s immigrant population growth and rent increases, and a 2017 study by Mussa, Nwaogu, and Pozo confirmed the direction of the effect.^[3] These are real costs, concentrated in high-immigration metros. But they are costs that a functioning supply side would largely absorb through construction rather than price escalation.

The Fiscal and Market Complexity Immigration Advocates Raise

The counter-narrative from immigration advocates adds another layer of complexity. Research by the Americas Society and Partnership for a New American Economy finds that the 40 million immigrants currently in the United States have collectively added an estimated $3.7 trillion in housing wealth — primarily by stabilizing communities where native-born populations are declining and home values would otherwise fall.^[6] The Bipartisan Policy Center has noted that immigrants tend to settle in areas already experiencing population growth, where their demand reinforces rather than distorts existing market trends. The American Immigration Council’s research also concludes that immigrants disproportionately avoid the highest-cost, most supply-constrained metros — which means their demand effect is often felt in markets better positioned to absorb it.

There is also a supply-side contribution that the HUD framing omits entirely: immigrant workers constitute a substantial share of the U.S. construction workforce. Restricting immigration sharply reduces the labor pool available to build the additional housing units that would relieve affordability pressure. The Cato Institute has estimated that deporting 10 million undocumented immigrants could eliminate nearly $1 trillion in U.S. housing wealth, partly through this construction-labor channel.^[19] The policy arithmetic is therefore not straightforward: reducing immigration inflows may modestly reduce demand, but it simultaneously constrains the supply-side response that would do far more to improve affordability.

Parsing the “30 Percent” Claim

Social media commentary around this topic has circulated a specific claim — that a Dallas Federal Reserve study found illegal immigration caused 30 percent of the increase in home prices. This figure requires careful handling. The research in question examines the contribution of immigration-driven household formation to overall price growth across a defined period; it does not attribute 30 percent of all price increases nationally to illegal immigration specifically. The distinction matters. Attributing a share of demand growth to a population cohort is not the same as identifying that cohort as the cause of a price crisis — particularly when the supply-side constraints that amplify any demand shock remain unaddressed.

The HUD report’s California and New York figures — 100 percent of rental price growth attributed to the foreign-born population — are similarly striking but require the same interpretive care. Those states have among the most restrictive zoning regimes and lowest housing-construction rates in the country. The same six million people arriving in Texas and Florida, where permitting is faster and construction more responsive, would have generated a materially smaller price effect. The immigration variable and the supply variable are not independent; the severity of the outcome depends on both.^[3]

What the Evidence Supports

The honest accounting looks like this: the Biden-era immigration surge was historically large — six million foreign-born additions in three years is a genuine demand shock — and it did contribute to rental price pressure, particularly in already-constrained coastal markets. The HUD report’s core empirical claim about demand growth attribution is grounded in real data, even if the causal framing is politically inflected.^[1] At the same time, the Harvard JCHS timing analysis is a legitimate challenge to the claim that immigration was the primary driver of the affordability crisis: the worst price acceleration preceded the surge, and rent growth slowed as immigration peaked.^[7]

The broader housing affordability crisis — 43.5 million cost-burdened households in 2024, with renter costs rising 38 percent since 2019 against income growth of just 28 percent — is the product of decades of underbuilding, restrictive land-use policy, and supply-side dysfunction that predates any single administration’s immigration posture.^[12] Immigration added pressure to a system already near its breaking point. Fixing the system requires addressing both the demand contributions that immigration creates and, far more urgently, the supply constraints that ensure every demand increase becomes a price crisis rather than a construction opportunity.

Report released from the Federal Reserve finds 30% of the cost of increase in home prices and 20% of rent increases ARE DUE TO ILLEGAL IMMIGRATION

No longer a conspiracy theory. “We just saw a study from the Federal Reserve just last week finding that 30% of the increase in home…

— Donna Diemer / Beach Sandals (@DonnaDiemer) June 22, 2026