Tariff impacts and immigration restrictions are expected to result in declining housing starts and completions in 2025, according to a report from Fitch Ratings.

Fitch reported that housing starts in the U.S. fell 2.9% year over year in February. The credit rating agency expects that full-year starts and completed homes will either remain flat or decline slightly, citing both cost pressures from the Trump administration’s wide-ranging tariffs and labor concerns.

“Foreign born, non-citizen workers represent an overwhelming share of key specialty construction occupations, and immigration restrictions are likely to raise labor costs,” the Fitch report noted.

Echoing a recent report from Cotality, Fitch expects that limited supply will result in home price growth between 3% and 4% in 2025. That would be on par with last year’s increase in home prices.

Fitch also predicts modest increases in both new and existing home sales in 2025.

“We are forecasting a 4% increase in new home sales, exceeding pre-pandemic levels, supported by homebuilder incentives,” the report stated. “Existing home sales are predicted to rise by 5%, comparable to Great Recession lows.”

In 2024, existing home sales totaled 4.06 million units, which was the lowest mark since 1995, according to the National Association of Realtors.