The Future of Homebuilding: Domestic Migration Is Driving the Housing Market

Immigration levels have exploded over the past two years, but a surge in domestic migration is driving housing demand—and it’s having the biggest impact on new-construction home opportunities.

It’s not just Texas and Florida luring domestic migrants, but also many other parts of the country where populations are booming.

For homebuyers, understanding these trends is essential for finding affordable, modern homes in emerging neighborhoods.

A surge in immigration and domestic migration trends

Immigration increased significantly in 2022–23, adding around 6 million people, according to a report by John Burns.

This increase was three times the average growth seen between 2010 and 2019. As a result, about 700,000 new households formed, most of which were renters. These households also account for 133% of the multifamily housing units typically completed in an average year. 

John Burns Research and Consulting estimates that the immigration surge from 2022 to 2024 added 100,000 additional owner households. This increase in homeowners over the three-year period represents 10% of the new single-family homes completed in an average year.

This growth, along with changes in where people are moving within the country, raised the demand for housing.

While immigration is expected to return to normal levels by 2025, domestic migration will still play a key role in housing growth, especially in metro areas with fast population growth.

For homebuyers and renters, knowing where new homes are being built can help them find affordable housing in cities that have strong job markets and lower living costs. 

Will slowing immigration affect the housing market?

The slowdown in immigration is expected to relieve some pressure on the housing market, especially in the rental sector, according to the John Burns report. However, domestic migration will still play a crucial role in housing growth.

What about the development of new construction?

President-elect Donald Trump has announced various plans regarding housing, one of which will significantly affect housing activity: mass deportations.

“Mass deportation would seriously dampen the residential construction labor force. Builders would face the challenge of replacing lost workers, which takes time and money, and they would likely have to pay more for replacement labor in the future,” says Realtor.com senior economist Joel Berner.

Why domestic migration is the new housing driver

Californians might be driving the “Texafornia” trend due to the high cost of living. But states like New York and Illinois have also seen an exodus of residents to Texas, Florida, and the Carolinas as they seek affordability. These movers want bigger homes, lower costs, and a better quality of life.

This shift has increased the demand for housing in these new destinations. As a result, homebuilders and rental developers are focusing more on building in these growing regions.

Migration patterns are changing again after a big wave of relocation during the COVID-19 pandemic. New trends have emerged, with places such as Orlando, FL, and Salt Lake City seeing negative domestic migration; Sacramento, CA, and Indianapolis staying on the positive side; and Austin, TX, almost plateauing after a huge boom from the pandemic.

Where are the new homes being built?

Part of the solution for the housing shortage is undoubtedly more new home construction, and some cities are ramping up on new builds better than others. They include Oklahoma City, OK, Cincinnati, Nashville, TN, and Miami. 

“The most notable thing about the top 10 markets where new-construction listings are growing fastest is that they fit in a frame that only covers about a quarter of the country,” says Berner. 

“New construction in recent years has focused heavily on the South region and to a lesser extent in the Midwest,” explains Berner. “The only Midwestern markets that appear here (Cincinnati and Springfield) are even in the southeastern reaches of the region.”

Demand for homes in the Sun Belt has been strong throughout the post-pandemic recovery, and builders have followed buyers South, driving up the available newly built listings in this part of the country.

What this means for homebuyers and renters

The increase in housing supply in these growing metro areas offers several key benefits for buyers and renters:

• Modern features and energy efficiency: Newly built homes typically feature modern layouts, updated appliances, and energy-efficient designs, which can lower utility costs and increase long-term savings.
• More affordable options: As builders focus on high-demand markets, more affordable housing is becoming available in these regions, often at lower prices compared with more saturated markets on the coasts.
• Less competition: In these emerging markets, there tends to be less competition for homes, particularly in suburban and exurban areas. This situation provides consumers with more options and a greater chance to negotiate favorable terms.

What to watch for in the coming years

Looking ahead, while immigration might slow, domestic migration will continue to shape the housing market. Consumers should pay attention to areas with strong migration trends, as these cities are likely to experience continued growth. As people move to regions with promising economic opportunities or more affordable living, housing demand in these areas is poised to increase.

“For prospective first-time homebuyers, it’s important to keep new construction on the radar. Builders have increasingly focused on smaller, more affordable homes in recent years, making brand-new properties more accessible to buyers on a budget,” explains Berner.

“With mortgage rates remaining high, newly built homes offer a significant advantage over existing ones,” adds Berner. “Unlike current homeowners who are hesitant to sell due to the ‘lock-in effect’ from lower mortgage rates, nearly all new homes are meant to be sold right away, providing buyers with more options.”