Houston area led nation in issuing housing permits in 2023 | Kinder Institute for Urban Research

These numbers mark a decline from 2022’s record figure, but still represent the third highest authorization year since 1988, when the Federal Reserve began tracking this data.

Updated information on housing in the Houston area will be available in the Kinder Institute for Urban Research’s 2024 State of Housing Report, scheduled for release June 20.

Following closely behind the Houston region in 2023 were familiar counterparts like the Dallas metro — 2022 leader in permits — with 44,366 single-family units representing a total of 68,029 permits, and the Phoenix metro with 24,708 single-family units out of 45,616 permits issued.

Since 2019, metro Houston has welcomed a total of 343,779 permitted housing units. While not every permit results in the construction of a home, it is a signal of the growth underway in the area.

Brock Eller, regional president of David Weekley Homes, said the strength of the Houston area real estate market has helped spur development.

“The cost of living has always been attractive to the Houston market in general,” he said. “Customers can enjoy a wide variety of living options within what people can afford, all within the same metropolitan area. There are a wide variety of options available to people. This includes a high-density layout in the city, like West University, to acreage in Magnolia to a cookie-cutter suburban home throughout the region. It helps to let people choose what they want without everyone gravitating toward one thing.

Historically, Houstonians have generally been evenly divided on whether to live in single-family homes or mixed-use developments. In the 2023 Kinder Houston Area Survey, about 60% of respondents said they preferred living in a mixed-use development. However, approvals for multi-family housing in metro Houston declined by nearly 35% in 2023.

Just as affordability was a barrier for potential buyers in 2022, this trend has continued into 2023 and likely extended into 2024.

The median sales price of single-family homes in the Greater Houston area decreased by 2.5% in 2023, from $338,295 in 2022 to $330,000, but sales of single-family homes still fell by 12% – which can be attributed to higher interest rates – according to the Houston Association of Realtors. In Harris County, the median sales price of a single-family home increased steadily by about 40% between 2019 and 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 is constantly increasing. Construction costs increased by 3.64% in 2023, according to a report from consulting firm Currie & Brown.

“We’re always looking for a way to ensure that the affordable option is always available,” he said. “Whether it’s internally reviewing floor plans, options or whatever we’re going to offer, we always want to make sure we’re affordable so the customer can make their own decisions.” Manufacturers all do things differently, but they all have the same theme.

Suburban counties in the Houston metro area are experiencing steady growth compared to Harris County. But from a development perspective, Eller said the expansion has been widespread and not concentrated in any particular area or neighborhood.

“Looking year by year and quarter by quarter, you might see a big surge in sales in one part of the city, and the next quarter you’ll see it elsewhere,” Eller said. “Growth is fairly balanced. This speaks to the size of our market. Just when one part is up and running, another gets a little hotter. We saw this trend before the pandemic and even now.

“I can’t think of an area where we’re not seeing growth. The Grand Parkway allows developers to go a little further, thanks to ease of access and infrastructure.

New home buyers are prevalent 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 census figures represent throughout the Houston metro area, The Kinder Institute’s 2024 State of Housing in Harris County and Houston webinar on June 20 will showcase changes at the neighborhood level.