The numbers mark a decrease from 2022’s record-breaking figure, but still represent the fifth-highest permitting year since 1988, when the Federal Reserve began tracking such data.
This story has been updated to reflect the latest information from the Federal Reserve. Updated Houston-area housing information will be available in the Kinder Institute for Urban Research’s 2024 State of Housing report, scheduled for release June 20.
Closely following the Houston area in 2023 were familiar counterparts like the Dallas metro — 2022’s leader in permitting — with 44,366 single-family units making up a total of 68,029 permits, and the Phoenix metro with 24,708 single-family units among 45,616 permits issued.
Since 2019, the Houston metro has seen a total of 343,779 permitted housing units. While not every permit results in a built home, it is a signal of the growth underway in the region.
Brock Eller, the senior division president of David Weekley Homes, said the strength of the Houston area’s real estate market has helped drive increased development.
“The cost of living has always been attractive for the Houston market in general,” he said. “Customers can get a wide variety of living options underneath the umbrella of what people can afford, all in the same metro area. There are a diverse amount of options available for people. That includes a high-density setup in the city, like West University, all the way to an acreage lot in Magnolia to a traditional suburban home throughout the area. It helps with letting people choose what they want without everyone going towards one thing.”
Historically, Houstonians have typically been evenly split in their choice to live in single-family homes or mixed-use developments. In the 2023 Kinder Houston Area Survey, about 60% of respondents said they preferred to live in a mixed-use development. However, permitting for multifamily units in the Houston metro decreased by nearly 35% in 2023.
Just as affordability was a hurdle for would-be homebuyers in 2022, that trend continued in 2023 and has likely extended into 2024.
The median single-family home sales price in the Greater Houston area decreased by 2.5% in 2023, from $338,295 in 2022 to $330,000, but single-family home sales still dropped by 12% — which can be attributed to higher interest rates — according to the Houston Association of Realtors. In Harris County, the median sales price for a single-family home had steadily increased by about 40% between 2019-2022 to $317,500 according to the Kinder Institute’s 2023 State of Housing report.
Eller said affordability is an important part of the equation for builders, but the cost of labor and materials are consistently rising. Construction costs increased by 3.64% in 2023, according to a report by the consulting firm Currie & Brown.
“We’re always looking for a way to make sure that the affordable option is always there,” he said. “Whether that’s looking internally at the floor plans, options or anything that we’re going to offer, we always want to make sure that we’re being affordable for the customer to make their own decisions. Builders all do it differently, but they all kind of have the same theme.”
Suburban counties within the Houston metro area are experiencing sustained growth compared to Harris County. But from a development perspective, Eller said expansion has been widespread, and not concentrated to any particular area or neighborhood.
“Looking at year over year and quarter by quarter, you might see a strong sales push in one part of town, and the next quarter you see it somewhere else,” Eller said. “The growth is pretty well-rounded. That speaks to the size of our market. Just when one part is up and running, then another will get a little bit hotter. We’ve seen that trend before the pandemic and even now.
“I can’t think of an area where we are not seeing growth. The Grand Parkway is allowing developers to go a little bit further, because of ease of access and infrastructure.”
New homebuyers are widespread in HAR’s “10 Hottest Communities in the Houston Area” report released in April, with Galveston, Harris, Liberty, Montgomery and Waller counties represented in the top 10. While the Census numbers represent the entirety of the Houston metro area, the Kinder Institute’s 2024 State of Housing in Harris County and Houston webinar on June 20 will present changes at the neighborhood level.
