For-sale signs are dotting Houston neighborhoods, but real estate developers are still filing permits, pouring concrete and acquiring land for new projects.
Federal data shows the number of privately owned housing units permitted between January and August was virtually identical to the same period last year, driven by strong developer interest in single-family and two-unit homes. Among the nation’s 10 largest metro areas, Houston posted the highest number of permitted units, which includes single-family and multi-family homes.
At the same time, the number of new and existing homes on the market is at a nearly 15-year high. More sellers want to offload their homes, but they’re struggling to find buyers as list prices and mortgage rates remain elevated. Developers, meanwhile, are increasingly cutting sales prices and offering buyer incentives, such as below-market mortgage rates with preferred lenders and reduced closing costs.
Yanling Mayer, a housing economist at Texas A&M’s Texas Real Estate Research Center, said these incentives tend to steer prospective homebuyers toward purchasing new homes over existing properties.
“With all the homes being built, and the builders trying to move the inventory, something has to give,” Mayer said. “Builders are either cutting prices or offering affordability adjustments like interest rate buydowns or closing cost assistance.”
Despite the high supply of houses for sale, home ownership is out of reach for many Houstonians, as the difference between prices and wages continues to widen.
“The affordability question is still there and it’s still growing,” said Caroline Cheong, associate director of housing and neighborhoods at the Kinder Institute. “It’s a little more complicated than just an economic issue of supply and demand.”
Developers betting on Houston’s future
As of August, Houston had more than five months of housing inventory available. Months of supply is a housing industry metric that estimates how long it would take to sell all current houses on the market if there were no new listings.
For developers, the Houston region remains attractive because of steady population and employment growth, ample suburban land, building-friendly regulations and the city’s potential for future housing demand. Even as inventory rises, developers continue planning projects that may take years to build to meet long-term population projections.
Keith Luechtefeld is a previous president of the Greater Houston Builders Association and the Houston division president of Shea Homes. He said that the market’s current conditions are unlikely to alter strategies for housing developers.
“We have to be careful not to overreact or underreact to that data,” Luechtefeld said. “We really believe in the viability of Houston as a market. We have to look more long-term than some of the immediate-term metrics."
Prices not budging amid supply surge
Even with the number of existing homes for sale spiking and developers pushing forward with new construction, homeownership remains far out of reach for most Houston residents.
The median single-family home price in Houston was $330,000 in October, according to the Houston Association of Realtors, and $335,000 at the same time in 2024. According to the Kinder Institute’s State of Housing report, a household earning the median income in Harris County in 2024 could only afford a home worth about $195,000.
“We have ample supply, but it’s ample supply in a part of the market that’s not necessarily concerned with affordability,” Cheong said. “The challenge here in Houston is that we build more housing than most major cities in the country, yet we are also among the worst in the country for low-income housing.”
Cheong pointed to the limits of relying on “filtering,” the concept that higher-end housing eventually becomes affordable to lower-income households over time. She said that in Houston, this strategy has been unsuccessful in supplying sufficient housing for those at the lowest income levels. Ultimately, she said reducing costs will come down to public will and policymakers.
“If we're not going to rely solely on filtering as the solution to increasing supply at the low-income level, then to build supply into that level we need public support and more attention paid to supporting direct housing for low-income families,” Cheong said.
