Did Illegal Immigration Drive Up Your Rent? The Dallas Fed Study Trump Cited, Examined

The Claim in Context

On July 8, 2026, President Donald Trump told reporters aboard Air Force One that Biden "raised the cost of housing by 40 and 50% — the cost of (a) rental — because they were housing illegal aliens in all of those empty units."^[1] In the days following, Trump and White House communications cited a Federal Reserve Bank of Dallas working paper as evidence that unauthorized immigration drove rental housing costs sharply higher.

Two claims emerge from this episode. First, the broader proposition: that illegal immigration was a major driver of U.S. rental housing price increases during the Biden years. Second, a more specific claim: that the Federal Reserve attributed a specific, large share of rental price increases to illegal immigration. Both deserve careful examination against what the Dallas Fed study actually shows.

The better question behind both claims is not simply "did illegal immigration raise rents?" (it did, modestly) but: "What actually drove the 2021–2024 rental housing crisis, and how large was immigration's piece of that?" The answer changes the policy implications substantially.

Claim 1: "Major Driver" — Verdict: Misleading

Unauthorized immigration contributed to rising rents. The Dallas Fed study documents that effect with specific figures. But "major driver" implies primary or dominant causation, which overstates what the study found. The paper attributes roughly one-fifth of rent growth to unauthorized immigration. The other four-fifths trace to structural housing supply shortfalls, pandemic demand shifts, and interest rate dynamics that economists had identified as the primary causes before the 2021 immigration surge began.^[2]

Trump's version also introduces a specific mechanism — "housing illegal aliens in empty units" — that is distinct from the demand-side channel the study measured. That mechanism has no evidentiary support (see the sub-claim section below).

What the Dallas Fed Study Actually Found

The Federal Reserve Bank of Dallas published working paper wp2607, "The Impacts of Unauthorized Immigration on U.S. Labor and Housing Markets: New Evidence from Administrative Microdata," on March 23, 2026.^[3] Its authors are Daniel J. Wilson of the Federal Reserve Bank of San Francisco and Xiaoqing Zhou of the Federal Reserve Bank of Dallas.

The paper examines the period from early 2021 through early 2024, when U.S. net unauthorized immigration reached historically high levels. Per Congressional Budget Office estimates, roughly 7 million people were added to the U.S. population through unauthorized channels across that period, approximately twice the pace of legal immigration.^[4]

The core finding: a 1% increase in unauthorized immigrant workers in a local labor market raised local home prices by about 2.2% and rents by roughly 1.4%. Scaled to the full 2021–2024 immigration flows, this translates to approximately 4.3 percentage points of the 22.6% total rent increase, or about 19% of the total rise in the average metro.^[5] Home price growth shows a somewhat larger attribution: unauthorized immigration accounted for roughly 30% of home-price growth over the same period.

Claim 2: "The Fed Attributed a Large Share" — Verdict: Mixed

This claim is accurate on the "specific" part and weaker on "large share" and "The Federal Reserve."

On specificity: the paper is quantitatively precise. Wilson and Zhou attribute exactly 4.3 percentage points to unauthorized immigration against a 22.6% total increase, yielding an identifiable share of about 19%. That is a concrete, falsifiable figure, not a general tendency.

On "large share": whether 19% qualifies as large depends on the comparator. Among individually measurable demographic variables, it is substantial. Against the combined weight of structural housing supply shortfall, pandemic demand shifts, and interest rate effects that explain the other 81%, it is the smaller piece of the picture.

On "The Federal Reserve": the paper explicitly states it is a "preliminary draft circulated for professional comment" and "does not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System."^[3] Attributing the finding to "The Federal Reserve" conflates the authors' preliminary research with an official institutional position. This distinction matters because working papers precede peer review, and their estimates sometimes shift.

What Actually Drove Rental Prices 2021–2024

The Dallas Fed paper itself frames unauthorized immigration as a "housing demand shock in the face of short-run inelastic supply."^[3] That phrase — inelastic supply — points to the structural constraint most housing economists identify as the primary cause of the 2021–2024 rental crisis.

Several factors converged to drive the 22.6% rental price increase:

• Pre-existing housing shortfall. Freddie Mac estimated the U.S. entered the pandemic period with a housing deficit of approximately 3.8 million units — a gap built up over more than a decade of underbuilding, particularly after the 2008 financial crisis.^[7]
• Pandemic demand shift. Remote work drove household formation, pushed renters toward larger units, and relocated demand to Sun Belt suburbs that lacked housing stock to absorb it. This dynamic raised rents both where people moved and where they left.
• Interest rate trap. As mortgage rates climbed after 2022, potential homebuyers stayed renters longer, compressing vacancy rates further.
• Construction supply inertia. Homebuilding failed to expand sufficiently to absorb added demand — a finding the Dallas Fed paper itself noted: unauthorized immigration raised prices without producing a corresponding supply response, because construction activity did not materially increase in higher-immigration metro areas.^[8]

Unauthorized immigration added roughly 7 million people to the U.S. over three years, adding demand pressure to a market already short on supply. But the supply constraint predated the immigration surge and would have produced significant rent inflation on its own.

The Strongest Case for Immigration's Role

The case against "major driver" should engage squarely with the counter-evidence. The Dallas Fed paper's 30% attribution for home price growth (higher than the 19% for rents) suggests immigration's effect varies by housing type and market. In supply-constrained metros, the effect could be higher than the average figure implies. A 7-million-person influx over three years is, by historical standards, an exceptional demand shock, and its housing-market footprint shows up in the data.

Economist Dean Baker of the Center for Economic and Policy Research notes that newly arrived immigrants typically have low housing demand per capita; they often share units with family, friends, or other immigrants, which dampens the aggregate effect relative to native-born household formation.^[2] But the cumulative demand of millions of additional residents still registers in the data.

Unauthorized immigration was a contributing factor of measurable magnitude, accounting for roughly one-fifth of rent growth and one-third of home-price growth in the average metro. It was not the primary cause of the 2021–2024 housing affordability crisis. The paper documents a real effect; the exaggeration lies in the framing, not in whether that effect exists.

The "Empty Units" Sub-Claim

Trump's specific mechanism — that the Biden administration housed illegal immigrants in vacant private rental units, which then raised prices — is separate from the Dallas Fed analysis and lacks evidentiary support. PolitiFact found no evidence the Biden administration placed undocumented immigrants in vacant private rental units.^[1] A similar claim from a Trump-allied campaign ad in May 2024 was rated False by PolitiFact at that time. The Dallas Fed study measured unauthorized workers increasing demand for existing rental stock through market competition, not through any government-directed placement program.

Rents Since 2024: What the Data Shows

Since Trump took office in January 2025, net international migration has declined more than 50%, the sharpest annual drop on record per administration figures.^[9] Asking rents have posted six consecutive months of year-over-year declines as of early 2026, with the largest drops in Sun Belt markets that saw the sharpest gains during the 2021–2024 period.^[10]

The White House attributes these declines to immigration enforcement. That causal link is plausible given the Dallas Fed paper's findings. But real estate analysts point out that a large wave of apartment construction (begun when demand and rents were near peak) is simultaneously delivering new supply to exactly those markets. Disentangling the immigration-reduction effect from the new-supply effect is not straightforward; both are pushing rents down in the same metros at the same time.^[10]

If rents stabilize after the new-supply pipeline thins without a new immigration surge, the immigration-causation argument for the original run-up weakens further. If they resume rising, the supply-constraint explanation gains ground.

What to Watch

• Now law The 21st Century ROAD to Housing Act became law on July 11, 2026, after Congress passed it (85–5 in the Senate, 358–32 in the House) and the 10-day constitutional clock expired without Trump's signature. Its housing-supply provisions directly address the structural shortage economists identify as the primary driver of the 2021–2024 rental crisis. Whether those provisions produce enough new units — and on what timeline — will determine how much of the remaining 81% of rent growth gets addressed through supply.
• Q3–Q4 2026 Monthly CPI shelter and Apartment List rent data through 2026 will clarify whether current declines persist. If rents stabilize after new apartment supply is absorbed, but immigration enforcement continues, it will be harder to isolate immigration as a primary lever on prices.
• Peer review Working paper wp2607 by Wilson and Zhou is a preliminary draft. If and when it completes peer review, the 30%/20% estimates for home prices and rents may be revised. Figures currently cited in political discourse should be read as preliminary findings subject to change.
• Ongoing Independent replications of the Dallas Fed methodology — covering different time periods or metro stratifications — would clarify how much the findings depend on the specific 2021–2024 immigration episode versus longer-term structural relationships between immigration and housing costs.