What’s Driving the Home-Building Boom in Texas?

The cliché that "everything is bigger in Texas" is certainly true of the state’s multifamily building boom. A midyear report from RentCafe shows that Texas’s major metro areas, including Austin, Houston, and Dallas, are on track to complete more than 70,000 new apartments in 2025—more than the entire Midwest combined, and leading in the top 10 metros across the country for new apartment construction. In total, the report reads, the whole state will add 80,000 units to the growing Sunbelt, where half of the total deliverable units in America will be built this year. Though the country has seen an overall decline in new multifamily developments since 2024, Realtor.com notes that Texas accounts for 15 percent of all new home construction permits, making it the number-one state for new permits even though it only houses nine percent of our total population. What’s their secret (not barbecue) sauce to such remarkable growth?

Like most consumer products, housing responds to demand, and Texas has seen a lot of it. Between 2020 and 2024, the population grew by 2.1 million people—a seven percent increase—according to Newsweek. Developers have taken note: "The more people that show up in a community or a region, the more demand there will be," says 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."

But the state also has other perks that facilitate lower-cost, speedy construction. Texas land, says Oney, is largely unencumbered by geographic constraints like mountains or hillsides; its relative flatness means that land can be easily developed with necessary infrastructure like roads and plumbing. But essential to housing expediency is how the land is regulated. Shorter plan review processes allow developers to jump through fewer hoops to get a project off the ground, meaning less wait time that adds to construction costs. Regulations do vary by county, but according to the blog Market Urbanism, in a city like Houston where zoning is a function of local covenants and deed restrictions, they don’t apply to vacant or agricultural land. "This land is free to develop into the use and form most in demand at that particular time and place. In most zoned cities, acres of vacant land sit underutilized because it’s zoned for uneconomical uses," reads a 2018 entry.

Such is the subject of Ezra Klein and Derek Thompson’s 2025 book, Abundance, wherein the authors build an argument around bureaucratic complexity—that is, in a good-natured quest for democracy, we’ve unintentionally built regulatory systems that stop us from building new infrastructure, public utilities, and importantly, housing. Quoting a policy paper by University of Michigan Law professor Nicholas Bagley, they write: "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."

There’s much to be critiqued about removing some bureaucratic practices that help build trust in government, bolster civic participation, or inform top-down decision-making. But when it comes to building a lot of new apartments very quickly, removing these barriers has had a positive effect on supply. Citing a paper by the RAND Center on Housing and Homelessness, the Texas Affiliation of Affordable Housing Providers (TAAHP) created a side-by-side comparison between Texas and California and noted that projects in the Lone Star State have lower soft costs and per-unit development fees; also, they’re completed nearly two years faster. Though the paper specifically addresses subsidized housing, TAAHP remarks that "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."

These low costs are passed onto Texas residents, contributing to the state’s relative low cost of living. Rents for zero-to-two bedroom apartments in Texas have consistently been less than average of the nation’s top 50 markets, according to Realtor.com’s 2025 report; RentCafe states that Texas’ cost of living is an average of five percent lower. This can also contribute to the overall cost of development where construction labor fees are critical. "Employers, generally, their mindset is that they don’t want to pay any more than they have to, 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," says Oney.

Population growth and construction workforce opportunities, coupled with regulatory relief, create what many call a "business-friendly environment" that is frequently referenced when it comes to Texas’s building boom. Still, there are caveats: Oney says that the cost of living is rising due to inflation, and while labor inflow has been high, much of it is concentrated in larger metro areas. "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," he says. "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." Further, Texas is a right-to-work state, and construction union membership is low. This can keep labor costs down, but it also places workers at a disadvantage when it comes to bargaining for better pay or workplace conditions.

These issues are particularly present for undocumented workers, which the research nonprofit Urban Institute states comprise nearly a quarter of all construction laborers in Texas (around 337,000 total). The Houston Chronicle reports that wages have remained depressed and as ICE raids continue, employers have "taken advantage of the political climate to undercut wages further, or avoid paying at all." The Urban Institute further notes that immigration crackdowns could have a dramatic, negative effect on housing construction overall. And, says Oney, they could impact the engine that makes the housing machine run—high-demand resulting from population growth. "A lot of our growth has been from international migration," says Oney. "If that goes down nationally, will Texas grow slower?"

Top photo by Brandon Bell/Getty Images.

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