The order imposes a 90-day ban affecting citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen and a 120-day bar on all refugees. A federal judge suspended the order after Washington state challenged it. Nearly 130 technology companies filed an amicus brief in support of Washington as a federal appeals court hears the challenge.
Trump argued Wednesday that the administration made the move hastily to prevent terrorism. His administration has repeatedly said it moved quickly to stop potential threats from "pouring in" to the U.S., though it has given no evidence to back an increased threat.
Rascoff said the order has been perceived abroad as a ban on the Muslim faith, sparking dangerous propaganda.
"We think it's bad for business, we think it's bad for the country, and frankly we don't think it makes the country safer, I think it makes us less safe," Rascoff said. "It cuts at the very center of the culture of the country, which welcomes refugees."
Rascoff told CNBC's "Squawk on the Street" on Wednesday that he only speaks out on issues like housing and technology that directly affect his company, which provides technology to help in the buying, selling renting and financing of homes. He said the recent executive order is one such issue.
"The reason that you hear tech leaders speaking out about this is tech and immigration are inextricably intertwined," Rascoff said. "The innovation that immigrants bring to this country, the ingenuity, the entrepreneurialism, a lot of that is the lifeblood of the tech industry."
Still, Rascoff said that Zillow plans to work closely with Trump's nominee for secretary of Housing and Urban Development, Ben Carson.
"I don't know Dr. Carson personally, though we look forward to working with him," Rascoff said. "We've always had a very close relationship at Zillow Group with HUD, the Treasury, Fannie, Freddie and the White House. ... We're a very important voice on housing because of the size of our audience, so we think it's important to be working with government to shape housing policy."
The new administration comes amid a challenging environment for Zillow, as the housing market slows slightly, Rascoff said. Home affordability fell to the lowest levels in seven years at the end of 2016, according to a report from Black Knight Financial Services.
Zillow shares dropped more than 7 percent Wednesday, despite posting better-than-expected quarterly results of 14 cents per share, adjusted, on revenue of $228 million.
"We reported a great Q4 in terms of revenue and profit, ahead of expectations, but as usual, the stock always reacts to the forward-looking guidance," Rascoff said.
Zillow is making investments that Rascoff expects to pay off down the road, including brand advertising and building software tools for real estate agents.
"The guidance that we gave for 2017 was a really strong revenue number ... which for a company less than ten years old is really impressive," Rascoff said. "But some short-term investors would like us to be more profitable in the near-term."
Correction: Nearly 130 technology companies filed an amicus brief in support of Washington state's challenge to the travel ban. An earlier version mischaracterized the move.
— CNBC's Jacob Pramuk contributed to this report.