Texas Housing Shortage Worsens Despite Robust Homebuilding

Texas’ housing shortage is deepening, with home prices and rents continuing to rise due to limited supply, even as construction is on the rise.

Texas had a shortfall of about 320,000 homes in 2022, an increase from 306,000 the previous year, the Texas Tribune reported, citing housing policy organization Up For Growth.

Texas has struggled to keep pace with demand, even though it is the country’s top home-building state. Demand is driven by economic growth and population influx. The shortage is pushing housing costs higher in major metropolitan areas, including Houston, Dallas-Fort Worth and San Antonio, as competition intensifies for available homes.

“Texas has been building extensively, but it’s often not enough to keep up with both in-state demand and out-of-state migration,” said David Garcia, policy director at Up For Growth.

The housing shortage isn’t unique to Texas. A national deficit has escalated housing costs across the country. Up For Growth estimates 3.8 million homes are needed to improve affordability.

Many Texas cities expanded housing construction, particularly with detached, single-family homes in suburban areas. However, high population growth has revealed the limits of outward expansion as a long-term solution, Garcia said.

The Austin metro benefited from an apartment-building surge, reducing its shortfall by nearly a third. This building boom has helped drive down rents in the region for 16 months, though the area still needs 24,000 homes to meet demand.

As housing costs climb, advocates are urging state and local governments to ease zoning restrictions that limit denser housing options, such as townhomes and smaller apartment buildings, which could help increase supply and lower costs. Texas lawmakers are expected to tackle zoning and housing affordability issues when they reconvene in Austin next year.

— Andrew Terrell