Houston Is Building The Most Homes Nationally. It Needs Even More

Houston and Dallas-Fort Worth together produce 40% more housing than the entire state of California. 

That’s still not enough to keep up with population growth in Houston, National Association of Homebuilders Chief Economist Robert Dietz said.

“Houston is underbuilding compared to recent population trends,” Dietz said at the Greater Houston Builders Association’s midyear economic forecast on Tuesday.

The greater Houston area added 16 people per 1,000 residents but issued only 5.86 single-family homebuilding permits per 1,000 residents in 2025. As building material costs continue rising, the region saw a 10% year-over-year drop in single-family building permits in April, Dietz’s presentation showed. 

“The demand for single-family construction has decreased,” Dietz said. “The number of single-family homes is down 15% to 20% from two years ago.” 

Average building material costs are up 8% from a year ago, a direct effect of the lingering impact of tariffs, Dietz said. Cost increases range depending on the specific material. Aluminum pricing is up 60% year-over-year, while lumber prices are basically flat, he said.

Regulatory costs are also hindering homebuilding. Regulatory costs to build a new home increased by 40% from 2021 to 2026, averaging about $132K per new home, per the presentation.

That means regulatory costs account for 26.4% of the price of a new home. Builders can expect to pay about $47K in regulatory costs during development, for items like fees and required studies, and the remaining $85K during construction.

The price of homes in Houston has increased 43% since the onset of the pandemic, which Dietz called “a healthier place to be” compared to other fast-growing markets in Florida, where 60% to 80% increases have been recorded. 

The overall home price in the U.S. has increased 59% since Covid. In Texas, the increase is 51%. 

Housing affordability remains a significant issue in Houston and the rest of the country. The home price-to-household-income ratio is 4.84 nationally, down from a high of 5.34 in the second quarter of 2022. 

Ideally, that ratio would get closer to 4, Dietz said, and legislators and regulators will ease burdens to development. The removal of the 21st Century Road to Housing Act provision requiring build-to-rent developers to sell properties to a single-family buyer within seven years is an example of easing burdensome restrictions, he said.

“A policy win for the industry, recognizing a housing supply bill should supply housing, and got that really harmful provision out,” Dietz said.

NAHB’s 10-point plan to boost housing supply includes five points related to easing regulations, permitting roadblocks and upfront development costs. 

While more housing is needed, Houston is in a good position, especially when compared nationally. The Houston-Pasadena-The Woodlands market had the most single-family building permits in the country last year, with 46,343. DFW was second with 39,230.

This comes as the population is growing, with Houston’s increasing 1.6% from 2024 to 2025, compared to a 0.5% increase nationally. 

Dietz is hopeful that costs will level off. The homebuilding market is in a bit of a slowdown, but there is positive long-run potential for Houston, he said. 

“Nowhere has felt that impact in terms of inbound businesses and individuals like Texas,” Dietz said. “It's the middle of the country that's benefiting from the tech investment, a bit of a manufacturing renaissance that will continue. Yes, there's some headwinds from tariffs, but I think those will subside.”