Texas’s reputation for thinking big now extends beyond cattle ranches and highways—it’s reshaping the national housing market. A new midyear report from RentCafe reveals that the Lone Star State’s major metro areas—Austin, Houston, and Dallas—are among the top 10 nationwide for new apartment construction, with more than 70,000 new units scheduled for completion in 2025. That’s more than the entire Midwest combined. Altogether, the state is projected to deliver around 80,000 new apartments this year, accounting for nearly half of all new Sunbelt housing and underscoring Texas’s outsized role in meeting the nation’s housing demand.

Despite a nationwide slowdown in multifamily development since 2024, Texas continues to expand. Realtor.com reports that the state accounts for 15 percent of all new home construction permits, even though only nine percent of the U.S. population lives there. This makes Texas the number-one state for new permits.

So, what’s fueling this surge?

Population growth is a major driver. Between 2020 and 2024, Texas added 2.1 million residents—a seven percent increase—according to Newsweek. Developers are responding quickly. "The more people that show up in a community or a region, the more demand there will be," said Daniel Oney, research director at Texas A&M University’s Texas Real Estate Research Center. "And so developers try to anticipate that—they’ll look at the trends, and they will try to build apartments to meet the demand that will show up, say, in the next eighteen months."

Texas also offers an environment that favors rapid and cost-efficient construction. Unlike states with mountainous terrain or limited buildable land, Texas’s flat landscapes make infrastructure installation easier and faster. Equally important is its regulatory approach. Many counties streamline planning and permitting, reducing the bureaucratic delays that often add costs and years to development. In Houston, where zoning is governed by deed restrictions and covenants rather than citywide ordinances, vacant or agricultural land is often free to be developed in whichever form is most in demand. "This land is free to develop into the use and form most in demand at that particular time and place," Market Urbanism noted in a 2018 post. "In most zoned cities, acres of vacant land sit underutilized because it’s zoned for uneconomical uses."

The topic of regulatory efficiency has also become central in policy discussions. In their book Abundance (2025), Ezra Klein and Derek Thompson argue that excessive bureaucratic hurdles—from environmental reviews to court challenges—have unintentionally slowed America’s ability to build infrastructure and housing. They cite University of Michigan law professor Nicholas Bagley, who wrote: "The ubiquity of court challenges, the artificial rigors of notice-and-comment rulemaking, zealous environmental review…collectively, these procedures frustrate the very government action that progressives demand to address the urgent problems that now confront us."

Texas’s streamlined process has real cost advantages. A comparison by the Texas Affiliation of Affordable Housing Providers (TAAHP) found that subsidized projects in Texas are completed nearly two years faster than in California, with significantly lower fees. "Market-rate housing costs per square foot in Texas are less than half the national average—and less than one-fourth the cost of California’s publicly subsidized affordable housing," the group reported.

This affordability translates to residents as well. Realtor.com’s 2025 report shows that rents for one- and two-bedroom apartments in Texas remain below the national average across the top 50 U.S. markets. RentCafe adds that the state’s overall cost of living is about five percent lower. Labor costs also play a role in keeping housing prices manageable. "Employers, generally, their mindset is that they don’t want to pay any more than they have to," Oney explained. "And if expenses are much higher in one market than another, they’re going to be compelled to provide a wage that an employee thinks is worthwhile, or they’re going to lose out to another employer."

Still, the boom is not without challenges. Texas’s right-to-work laws keep labor costs lower, but they also limit union influence and worker bargaining power. Undocumented workers—who the Urban Institute estimates make up nearly a quarter of the state’s construction workforce, about 337,000 people—face added vulnerabilities. The Houston Chronicle reports that ongoing immigration crackdowns have allowed some employers to undercut or withhold wages, a trend that could harm both workers and the housing supply. "A lot of our growth has been from international migration," Oney noted. "If that goes down nationally, will Texas grow slower?"

Another concern is uneven access to labor. While large metros attract workers, smaller cities in Texas struggle. "It’s easy to find labor in the big cities, but in the smaller markets, we actually tend to have a shortage of construction labor," said Oney. "I think that’s one of the reasons why it’s been hard to build housing in some of Texas’s smaller cities, because [they] cannot outcompete the booming subdivision development in a place like Dallas or Houston or Austin."

Even with these challenges, Texas continues to present what many call a "business-friendly environment" for housing construction—an environment built on population growth, available land, and lower regulatory barriers. While the nation as a whole grapples with affordability crises and slowed construction, Texas’s unique mix of advantages has positioned it as the country’s epicenter of new apartment building.

Originally reported by Anjulie Rao in Dwell.