Feel like Houston is building more homes than ever? You are not far off. The Houston area led the nation in residential building permits last year, according to U.S. Census data analyzed by Rice University’s Kinder Institute for Urban Research.
In 2023, the Houston metropolitan statistical area issued a total of 68,755. Of those, 50,444 were for single-family homes.
That puts Houston ahead of Dallas-Fort Worth’s 44,366 permits for single-family homes and the Phoenix metro’s 24,708.
When you count all residential permits, Houston still leads, slightly ahead of Dallas-Fort Worth with 68,029, followed by the New York metro with 63,030. While Houston’s total residential permits actually decreased from the prior year, 2023 still had the fifth-highest number of permits on record in the metro, according to the Kinder Institute.
The fact that Houston led the nation last year surprised local expert Lawrence Dean — though only slightly. Usually, the Dallas metro outpaces Houston in new home starts, said Dean, president and CEO of newly launched real estate data company Community Builders Advisory Services.
“From a market health standpoint, I’m not surprised that it’s up at the top because the Houston new home market throughout 2023 was robust (and) was kind of surprisingly strong, given (high) interest rates,” he said.
High interest rates have increased the demand for new homes as many existing homeowners are holding off on selling and homebuilders enjoy more flexibility, such as being able to offer mortgage buydowns. Still, even sales of new homes have been affected.
While sales of resale houses in Greater Houston dropped by 7.9% year over year in March, new home sales also went down for the first time since April 2022, by 5.6%, according to the Houston Association of Realtors. “I perceived (mortgage rates) to be having a bigger drag on the (homebuilding) market that it looks like it’s actually had,” Dean said.
Not all issued permits lead to home starts within the same year, of course. Typically, about 80% to 90% of permits issued translate into groundbreakings in a given year, Dean said. In Greater Houston, most of the housing growth is happening in the suburbs, where new construction and affordability is attracting homebuyers.
In the first quarter of this year, two of the region’s hottest communities were in Montgomery County, according to HAR. Home sales increased by 121% year over year in the Porter-New Caney West area and by 85.7% in Conroe Southeast.
The Crosby area completed the top three, with 82.2% sales growth. Meanwhile, the number of building permits for apartments went down last year in the Houston metro area — by 35%, Census data show.
Apartment occupancy has been on a downward trend in Greater Houston for the past few years and was 88.4% last month, with a 1.4% year-over-year decline in rental rates, according to Houston-based MRI ApartmentData.
“A variety of factors, ranging from decreasing availability of capital and community bank lending to increased operational costs, have all factored into that we should expect to begin to see a decline in the volume of new apartment complexes being built and delivered,” Dean said.
Currently, there are 76 apartment communities — with a combined 20,256 units — under construction and another 104 apartment projects totaling 32,760 units proposed, according to MRI ApartmentData.
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*This Exact is a repost from HBJ:
By Florian Martin – Reporter, Houston Business Journal