HOUSTON — For the second year in a row, Texas has struggled to build enough homes to keep up with demand, worsening an already historic housing supply gap and putting additional pressure on affordability across the state.
A new Realtor.com report shows the nationwide housing deficit topped 4 million homes in 2025, up from 3.8 million in 2024, highlighting the persistent underbuilding in the U.S. housing market. In Texas, the gap between available homes and demand has contributed to rising home prices and rents, particularly in the Houston area.
Despite robust building permit activity in major metros like Houston, overall construction still fell short of household formation. Nationally, roughly 1.41 million new households were formed last year, compared with 1.36 million housing starts, leaving a continued shortfall that stretches supply and affordability.
“Even when annual construction and household formation are roughly balanced, the market is still digging out from more than a decade of underbuilding,” said Danielle Hale, chief economist at Realtor.com. “Without a sustained and targeted increase in housing supply, particularly in areas with strong job growth and persistent demand, affordability challenges will continue to sideline many would-be buyers.”
Texas remains the state that builds the most homes, but population growth, job opportunities, and migration from other states have kept demand ahead of supply. Analysts warn that unless construction, especially of affordable and entry-level homes, ramps up significantly, middle-class Texans will continue to face steep barriers to homeownership.
State lawmakers made steps in 2025 to reduce barriers by passing bipartisan bills easing permitting and zoning requirements, but experts say much more action will be needed to narrow the gap in the coming decade.
