By Shirmel Gumbs-Heyliger, President of the Greater Houston Builders Association’s Sales & Marketing Council
Houston’s housing market in 2025 reflects a dynamic interplay of strong demand, regulatory hurdles and economic pressures. While the region continues to attract new residents and investors, challenges in affordability and construction are shaping the landscape for realtors, homebuilders and buyers alike.
Houston remains a magnet for newcomers, with more than 25% of homebuyers in Texas coming from out of state, particularly from California and Florida. This influx has intensified competition in the housing market, driving up prices and straining available inventory.
Suburban areas are experiencing significant growth. As the need for housing increases and the availability of nearby developable land becomes strained, more builders are looking to suburban and exurban areas as potential community sites. From East Chambers County to Liberty County, far Southwest Fort Bend County and Waller County, the Houston region’s housing stock is growing in every direction, as new communities seek to meet the demand of homebuyers.
Despite robust demand, affordability remains a pressing issue. Mortgage rates could stay above 6% throughout 2025. This, coupled with elevated home prices, creates significant barriers for both first-time buyers and those looking to upgrade.
The Kinder Institute reports that nearly 70% of Harris County residents faced some level of difficulty affording their housing costs in 2024. High utility bills were the most common contributing factor.
The National Association of Home Builders (NAHB) 2025 Priced-Out Index highlights the sensitivity of Houston’s housing market to price increases. According to the index, every $1,000 increase in the price of a new home renders it unaffordable for an additional 2,740 households in the Houston-The Woodlands-Sugar Land metro area. This underscores how even modest price hikes can significantly impact homeownership accessibility for many residents.
Homebuilders are contending with rising construction costs, partly due to new tariffs on imported materials. These tariffs are projected to add approximately $9,200 to the cost of building a new home, impacting affordability and potentially slowing construction.
In response, some builders are offering substantial incentives to attract buyers. These include mortgage-rate buydowns, design upgrades, and significant price cuts. These incentives have increased since the beginning of 2025 for some builders.
Local jurisdictions are also implementing policies that affect development. In the Cities of Magnolia and Conroe, their city councils have extended temporary development moratoriums due to insufficient water capacity and/or pressurization, with plans to build new water wells and plants to support anticipated growth. These plans may take more than a year to complete. The delays associated with the moratoriums will have substantial impact on the cost of the homes in their jurisdiction, as builders carry the cost of communities under construction for much longer, at much higher interest rates than originally anticipated. The ultimate victim of these moratoriums will be homebuyers whose options will be limited to homes that had to be built at a much higher cost.
Other communities are considering increasing permitting fees and impact fees, in some cases adding thousands of dollars to the total cost of the home. The Greater Houston Builders Association works closely with local elected officials and staff to help those leaders create relationships with homebuilding, remodeling and community development professionals, so that impacts of regulatory and administrative decisions can be understood and unintended consequences may be avoided.
Looking ahead, the Houston region’s housing market is poised to remain active, driven by continued population growth and economic development. However, addressing affordability challenges and navigating regulatory hurdles will be crucial for sustaining momentum. Collaborative efforts between policymakers, developers and community stakeholders will be essential to ensure that housing remains accessible and that the market can meet the evolving needs of Houston’s diverse population.
For real estate professionals, staying informed about these trends and adapting strategies accordingly will be the key to success in Houston’s dynamic housing market. Strong communication between builders and real estate professionals is essential to the service that our allied industries provide to homebuyers!
