New Mexico is Struggling in Affordability and Homebuilding: Can Gov. Lujan Grisham Build Enough Homes?

New Mexico’s housing market sits at a critical turning point. Demand is strong, but supply remains far behind, leaving many families priced out.

Realtor.com® State-by-State Housing Report Card gave the Land of Enchantment a C-, reflecting a market where affordability is slipping and new construction hasn’t kept pace. The report—part of the Let America Build campaign—grades states on how well they balance homebuilding and affordability.

But this is a national problem. In fact, President Donald Trump recently put pressure on homebuilders to increase construction nationwide, given the issues with construction in the country. In a post on his Truth Social platform in early October, he accused major builders of hoarding lots to prop up prices—likening them to OPEC, which restricts oil output to maintain high prices.

“They’re my friends ... but now, they can get Financing, and they have to start building Homes. They’re sitting on 2 Million empty lots, A RECORD,” Trump wrote. He urged Fannie Mae and Freddie Mac to intervene and “get Big Homebuilders going” to “restore the American Dream.” 

Still, for New Mexico, the efforts to build new homes can't start soon enough.

New Mexico’s “C-” grade explained

Realtor.com analysis gave New Mexico a total score of 43.2, landing it in the bottom third of U.S. states. The state’s median listing price reached $392,571 in 2024, compared to a median household income of $61,656. The Realtors Affordability Score was 0.57, suggesting that only a small share of listings are within reach for median-income earners.

When it comes to new supply, New Mexico accounted for just 0.5% of national housing permits in 2024 while representing 0.6% of the U.S. population—a permit-to-population ratio of about 0.83.

The new construction premium—the difference between new and existing home prices—was only 2.4%, indicating that new homes aren’t drastically more expensive but remain scarce across most markets.

The Southwest’s affordability test

Nationally, new construction is helping ease price pressures, though gains remain uneven. According to the Realtor.com New Construction Insights, the median new-home price nationwide held steady at $450,797, while resale prices climbed 2.4%, bringing the national new construction premium down to just 7.8%—the lowest in the dataset’s history.

In the Southwest, however, supply constraints continue to weigh heavily on affordability. Neighboring states like Texas and Arizona have expanded building through streamlined permitting and investment in infrastructure, but New Mexico’s recovery has lagged.

Albuquerque, Las Cruces, and Santa Fe remain the state’s most competitive housing markets, each marked by rising costs and limited new inventory. Builders cite workforce shortages and supply chain costs as the main obstacles to meeting demand. But the demand still needs to be met.

“America is short more than 4.7 million homes, and every new home built helps close that gap while fueling local economies," says Shannon McGahn, executive vice president and chief advocacy officer at the National Association of Realtors®.

"NAR research shows that the U.S. has faced a persistent housing shortage for more than a decade, driving up prices and limiting options for buyers. Expanding housing supply creates jobs, supports small businesses, and affords families the opportunity to build generational wealth.”

Governor Lujan Grisham’s $120 million housing plan

Governor Michelle Lujan Grisham has made housing one of her administration’s top priorities. In 2025, she announced a $120 million statewide investment to expand affordable housing and reduce homelessness—a key component of a larger $140 million package of housing initiatives.

“These investments prioritize solving New Mexico’s housing crisis through focused investments in affordable and attainable housing,” Lujan Grisham said when unveiling the plan. “When we face a challenge of this magnitude, we must take an all-of-the-above approach.”

The governor’s plan includes funding for more than 1,500 affordable and attainable housing units, 1,500 new shelter beds, and more than 150 transitional homes for people exiting homelessness. It also dedicates $13 million toward housing infrastructure projects and $7.8 million for programs supporting families experiencing homelessness. Future rounds of funding will focus on site readiness and housing innovations designed to accelerate construction timelines.

This article was produced with editorial input from Dina Sartore-Bodo and Gabriella Iannetta.