As the nation braces for a sweltering summer in 2026, homeowners and residential builders are already facing a critical shortage of skilled labor.
But now, AI data centers are seemingly acting as a vacuum, sucking up licensed electricians and HVAC technicians away from the residential sector, which could prove detrimental to homeowners and homebuilders.
Another issue is that the influx of temporary workers has strained the housing supply, causing rents and home prices to skyrocket.
Abilene, TX, illustrates this upcoming challenge. Stargate, the new 4 million-square-foot AI data center, backed by OpenAi and Oracle, sits on the outskirts of the small West-Central Texas town.
Numbers speak for themselves: “Between 45% and 70% of the entire budget for data center construction goes to the electrical subcontractor,” according to The International Brotherhood of Electrical Workers.
Gene Lantrip, an Abilene homebuilder, says the AI data centers are “a double-edged sword.”
On the one hand, the influx of new workers who need lodging means more business.
On the other hand, his subcontractors lost many of their workers to higher-paying data centers, resulting in longer timelines for building houses or repairs.
The situation in Abilene
Abilene is “experiencing increased demand due to broader economic expansion across the region, including multiple large projects bringing new jobs and workers,” according to the data center project’s website. It adds that local leaders, developers, and community partners are “actively working to expand housing options” for this influx of workers.
This is something Lantrip is experiencing firsthand, as he says there are now 14,000 temporary workers and their families who need housing in the area.
“It’s great for homebuilders,” Lantrip says. “We are building more houses than we ever did, even more than during the COVID boom.”
Lantrip says that normally, his company builds around 60 to 70 houses a year. This year, he has 86 houses under construction and could build up to 150 by year’s end.
The trade-off: It now takes him two months longer to build them due to the dearth of subcontractors.
By paying significantly higher wages, these data center projects are bottlenecking new-home construction and leaving current homeowners vulnerable to long wait times for critical summer AC and electrical repairs.
It’s hard to compete when contractors are paid $15 to $20 an hour, while the data centers offer $40 plus a per diem, he says.
“You have all these houses, and my electricians and plumbers and HVAC guys can’t keep their crews. My electrician hired 18-year-old kids, some in high school, and trained them,” Lantrip adds. “But it takes time to train those kids.”
Another consequence: Higher rents and home prices. Lantrip says that duplexes he’s been working on were going for $1,500 to $1,800, and now go for $1,000 more, with square footage 15% higher than last year.
As of May, the average home price in Abilene increased 10.45% since last year, according to Realtor.com®.
More work is needed
According to iRecruit, the data center construction industry has an anticipated shortfall of up to 499,000 workers for projects that take 18 to 30 months to complete.
“This gap is driven by surging demand for AI infrastructure and cloud computing, leading to delays, cost overruns, and fierce competition for specialized skills like electricians and HVAC technicians,” according to the report.
So it’s no wonder local technicians are being poached, even though not all skills necessarily translate to those needed in a data center.
Ladd Schuiling, vice president of sales at trades resource website Skilledtrades.com, says that most of these electricians working on data center build-outs have commercial and industrial experience, and it’s harder for residential electricians to make the jump to industrial work.
“However, lots of data centers need lower-skilled electricians to do things like pull wire, where almost every electrician, no matter industry or experience, knows how to do,” he says.
And it’s not just electricians. HVAC and liquid cooling technicians are also in high demand, as AI data centers require enormous cooling systems.
Also, a large project does not hire workers for a few weeks; it hires crews for months, says Scott Schwandt, president and infrastructure systems expert at Gajeske, a Texas-based poly pipe company providing HDPE pipe supply, fusion, and fabrication.
“It exerts a quantifiable long-term pressure on the project timelines of residential and commercial builds, as the already undersupplied labor market absorbs higher numbers of skilled tradespeople,” he says.
Delays affecting homeowners
The labor shortage is also translating into delays for repairs and, sometimes, higher costs.
Danny Niemela, vice president and CFO at ArDan Construction, a licensed contractor and professional remodeler company based in Arizona, says that when you pull 200 electricians and HVAC techs into the same little area to work on one campus for a year, it takes a major bite out of the local workforce.
“If your AC went out in June, you may have previously waited two days for a qualified tech to show up. Now you could be looking at five or six days, or more if you need a specialty part delivered,” Niemela says.
Arizona is one of the states with the most AI data centers, and Niemela says that in the Valley region, labor costs for licensed trades such as electricians have risen across the board by roughly 12% to 18% in the past 24 months.
“Supply and demand. When there are more jobs than dudes to go do them, the pay rate inevitably increases,” he says. “That $3,500 panel upgrade you had done two years ago will run you $4,200 this year. Don’t get me wrong, material costs have risen, too. But often, when you’re fighting a corporation for manpower, you lose every time.”
Housing report cards vs. data center hot spots
The newly released Realtor.com Housing Report Card, which measures affordability and homebuilding in every state, also reflects this trend.
States with the most AI data centers are among the seven that accounted for more than half of last year’s building permits, according to the report.
For instance, Texas has one of the highest building permit rates, at 14.60%, and received an overall A- grade.
Meanwhile, Arizona, which has 184 data centers and 86 planned, according to the Pew Research Center, has 3.6% of the permits issued and an overall C score.
Finally, Virginia, which has the most planned AI data centers, according to the Pew Research Center, also has a high building permit share of 2.60%—yet it has an overall C- score.
While it’s fair to say that the centers are putting strain on the local residential labor pool, the core issue, labor shortage, has been existing for a long time.
A recent Associated Builders and Contractors report found that the construction industry “needs to attract an estimated 349,000 net new workers in 2026 to meet demand for construction services.” In 2027, the figure jumps to 456,000 new workers.
Patrick Murphy, CIO of Coastal Construction, says that while there’s no question data center construction is putting tremendous demand on skilled trades, it’s too simplistic to view data centers as just “stealing” workers from residential construction.
“The reality is we’ve had a skilled labor shortage in construction for years. Data centers didn’t create that problem. They exposed it,” Murphy says.
In the short term, he says, homeowners and homebuilders may feel some pressure, but he argues that we’re not headed toward a future in which AI infrastructure crowds out homebuilding altogether.
