That's a showstopper announcement, especially for such cities on the outer edges of the greater Phoenix metropolitan area. Home construction is a booming part of their local economies and critical to housing a surging population, in some of the fastest-growing communities in the nation.

Buckeye and Queen Creek lean heavily on new development for their economic health but also rely heavily on groundwater.

On Thursday, Gov. Katie Hobbs' announcement that groundwater supplies are short of what's necessary to serve existing commitments for the next 100 years made national headlines, raising worries about the viability of the region. Zillow, the national housing technology company, issued a formal statement.

The news could deepen the state's housing shortage and affordability problems. It could deter, rightly or wrongly, prospective out-of-state employers from coming to the Valley if they believe the area is unsustainable or that enough housing won't be available to accommodate their workforce.

Elected leaders, city officials, water experts and housing industry representatives reacted with mixed emotions, ranging from excitement, frustration and caution.

Buckeye Mayor Eric Orsborn and a spokesperson for Queen Creek emphasized that water was available for existing customers and downplayed the effect of stopping new home development.

Orsborn said, "There isn't anything to worry about when it comes to water with current residents and current businesses here in the city."

A spokesperson for Queen Creek said, "The announcement impacts a small number of undeveloped properties in Queen Creek that do not have an assured water supply — those properties must find a renewable source of water before they can develop."

Spencer Kamps, of the Home Builders Association of Central Arizona, said the restriction on new home development would worsen housing affordability and could harm the state's ability to attract employers.