Why San Antonio is Texas’ Hottest Homebuilding Market

A residential construction boom in San Antonio is cementing it as the focal point for housing growth in Texas.

The metro’s annual home starts reached 17,751 in the third quarter, outpacing the 16,663 initiated in neighboring Austin, the San Antonio Business Journal reported, citing Zonda.

The main reason San Antonio saw a robust 33 percent year-over-year increase compared to 11 percent for Austin is because “there are more buyers for new homes” in San Antonio, “homes are more affordable” and “it’s easier to get things done,” Zonda vice president Keith Hughes said.

Leading San Antonio’s residential construction boom is Florida-based homebuilder Lennar, which accounted for 61 percent of the nearly 900 single-family permits pulled across the city in the third quarter. KB Homes was the second-most active builder, pulling 5 percent of all permits.

Contributing to San Antonio’s homebuilding activity this year is Johnson Development Services. Earlier this year, the Houston-based developer, in partnership with Heartwood Development Company, began work on an 800-acre residential community with 2,000 homes on San Antonio’s Far West Side.

Affordability remains a key driver attracting buyers to San Antonio. The city’s median home price sat at $312,000 in September, significantly below Austin’s median of $425,000, according to the San Antonio Board of Realtors.

This affordability gap, coupled with escalating mortgage rates in the 7 percent range, has intensified demand in San Antonio, where builders continue to offer incentives, such as mortgage-rate buydowns, to keep homes within reach for buyers.

“If they’re doing buydowns, they will continue to do buydowns,” Hughes said. “I can’t say whether that will mean prices will go down, though.”

San Antonio’s homebuilding rate represents the second consecutive quarter of surpassing other Texas metros in growth. Dallas reported 46,635 home starts, an 11 percent year-over-year increase, while Houston’s 38,128 starts marked a 14 percent spike.

Similarly, other Sun Belt cities like Phoenix and Miami saw their own substantial increases of 50 percent and 44 percent, respectively.

— Andrew Terrell