Texas continues to dominate the national housing market, with new-home permits in the state accounting for 15% of all construction permits issued across the U.S. in 2024. As the second-most populous state and with ample land for development, Texas has become the epicenter of a housing surge fueled by strong economic growth and increasing migration.

A Landmark Report Highlights Texas’s Housing Growth

Realtor.com, in its latest "Landmark Report," highlighted how the state’s economic expansion and population influx have driven a new wave of home construction. Alongside the report, Realtor.com, a subsidiary of News Corp, announced its decision to relocate its headquarters from Santa Clara, California, to Austin, Texas.

"Basing Realtor.com in Texas puts our company at the heart of innovation and inspiration at a moment of national economic renaissance for America," said Robert Thomson, Chief Executive Officer of News Corp. He described the company’s investment in Austin as "a downpayment on the American Dream."

Danielle Hale, Chief Economist at Realtor.com, attributed the surge in new housing to Texas’s ability to accommodate growing demand through increased home construction.

"The state has grown rapidly in the last several years as people from across the country and across the world have seen what Texas has to offer," said Hale. "Texas has responded by building more and smaller homes to meet demand, helping the market settle and housing inventory climb back to pre-pandemic levels ahead of the nationwide recovery."

The Role of Affordability in Texas’s Housing Expansion

Strong job creation, economic opportunities, and affordability have been key drivers in the state's housing boom. Texas has consistently attracted residents seeking a lower cost of living and job opportunities in industries such as technology, education, manufacturing, and construction.

"The Texas economy is a model for other states," said Damian Eales, CEO of Realtor.com. "Residents are attracted to Texas first and foremost for its affordable housing, followed by its favorable climate and abundant jobs. This has put Texas on a path to potentially become the largest state by the year 2045."

To address affordability concerns, homebuilders have increasingly reduced the size of new homes. The median size of newly constructed homes in Texas in 2024 was 2,073 square feet, reflecting a 5.3% decrease from 2020. This downsizing trend outpaced the national average, according to data from the National Association of Home Builders (NAHB), which noted that the national median size of newly built homes was at its lowest since 2009.

Additionally, the share of new homes priced under $350,000 has risen, improving accessibility to homeownership. "America is facing a severe housing affordability crisis, fueled by a staggering shortfall of approximately 4 million homes," Eales noted. "Our Texas report is just the beginning of a series that will shine a light on the gaps in our housing supply. By showcasing solutions from states like Texas and calling attention to those that are falling behind, we can drive a national conversation that leads to real, meaningful change."

Expanding Housing Inventory and Challenges Ahead

Housing inventory growth has played a significant role in maintaining affordability, with Texas offering 23.3% more homes priced under $350,000 compared to the previous year. However, affordability challenges persist. While 47.5% of Texas's for-sale inventory falls under the $350,000 mark, only 17% of available homes remain affordable for households earning less than $75,000 annually. Even for higher-income earners making up to $150,000, only 66% of the available housing inventory falls within their affordability range.

Texas’s share of national housing inventory has steadily increased since 2017, when the state accounted for 7.6% of U.S. home listings. That figure climbed to 12.6% by 2024, driven by both internal migration and economic growth.

However, challenges remain. Median listing prices in Texas were $360,000 as of December 2024, about $40,000 below the national median but still $80,000 higher than in 2019. Mortgage rates hovering above 6% have further complicated affordability, with the typical monthly housing payment estimated at $2,100 assuming a 10% down payment.

Regional Affordability Trends in Texas

Among major metropolitan areas in the state, San Antonio emerged as the most affordable city for homebuyers, with the highest percentage of homes priced under $350,000. Houston, Dallas, and Austin followed in terms of affordability, though each has seen declines in lower-priced inventory since the pre-pandemic period.

Austin, which saw the largest affordability drop in recent years, experienced a notable rebound in 2024, with an increase in homes priced under $350,000. However, it remains the least affordable major metro in Texas.

As Texas continues to lead the nation in housing construction, experts believe that its growing inventory and affordability initiatives will play a critical role in shaping the future of the U.S. housing market.