Houston Leads Nation in Homebuilding due to High Demand

Houston is a boss when it comes to single-family home construction.

It is the No. 1 home building market in the country, with 232,810 permits approved between January 2020 and August 2023, the Houston Business Journal reported, citing Zillow. Trailing behind Houston was Dallas-Fort Worth with 207,471 permits and Phoenix with 138,445.

The surge in single-family permits — a key indicator of demand — has largely been driven by Houston’s rapid job and income growth. Builders have responded to the increased demand by accelerating construction efforts, a necessary move to alleviate the national housing shortage, which is estimated to be between 4 million and 7 million homes.

Last year alone, builders completed about 1 million single-family homes nationwide, making it the second-highest number since before the Great Recession.

One of the developers leading the charge in Houston is Legend Homes.The company has built 783 single-family homes in Greater Houston so far this year, compared to 785 in all of last year, said Tanya Rizzo, president of Legend Homes, which also operates in San Antonio and Dallas.

“I think we’re close to equilibrium to hit demand for where it stands today,” she said. “A lot of buyers are still sitting on the sidelines waiting for rates to drop, or even in the immediate short term, waiting for the political climate and the election.”

Houston’s uncomplicated regulatory environment has played a crucial role in its ability to outpace other cities in single-family home construction, said Lawrence Dean, CEO of Community Builders Advisory Services.

“Houston is better able to satisfy housing demand than many other metros with greater regulations and a lengthier entitlement process for new development,” Dean said. “That is why, on a relative basis at least, Houston has remained a more affordable housing market than many other major metros.”

The metro’s home prices have increased slower than other major markets. According to a recent Zillow analysis, single-family home values in Houston rose by 39 percent between January 2020 to this August, compared to 47 percent in Dallas-Fort Worth and 54 percent in Phoenix. The city’s median home price reached $335,000 at the end of last month, marking a 1.1 percent increase from the previous year.

It is not just residential construction that is seeing a boom in Houston. More than $25 billion in residential, commercial and institutional construction contracts were awarded through the first seven months of the year, marking a 36 percent increase from the $18.6 billion awarded over the comparable period last year, according to the Greater Houston Partnership and Dodge Data & Analytics.

— Andrew Terrell