Houston’s Housing Market Is Cracking—And No One’s Talking About It

Houston’s housing market is supposedly strong. Prices are up, builders are still selling homes, and real estate agents keep saying now is the best time to buy. But something about this market isn’t adding up.

If you look beyond the headlines, you’ll see a housing market that’s barely holding together. Builders are throwing out massive incentives to keep buyers interested, but home sales haven’t actually improved. Prices are artificially propped up, and inventory is piling up behind the scenes. Buyers? They’re either sitting on the sidelines or getting squeezed out of the market entirely.

This isn’t a crash, but it’s definitely not stability either. And if no one else is going to talk about it, I will.

Builders Are Quietly Panicking—Even If They Won’t Admit It

The thing about builders is that they never openly admit when they’re struggling. Instead, they tweak the numbers. They hide inventory. They dangle incentives in front of buyers like a magician distracting the audience from the trick.

Right now, the incentives are massive—the average is $30,000+ in rate buy-downs, free upgrades, closing cost assistance. If demand were really as strong as they claim, none of that would be necessary.

Here’s what caught my attention:

In January 2024, home builders in the South had their worst month for home sales since 2012—a 12-year low. Winter storms played a role, but this is part of a much bigger pattern.

Houston’s new home listings jumped 27%—but that’s just what’s publicly listed. Builders are more than likely keeping some of the homes off the market, releasing them in waves to prevent prices from dropping too fast.

Price cuts are already happening. In the last few months, 31% of builders have started reducing prices. That number is only going to grow.

The Builders Running Houston’s Suburbs Aren’t Who You Think They Are

Houston leads the nation in new construction, but it’s not the local, higher-quality builders shaping the market. It’s D.R. Horton, Lennar, and Pulte—high-production builders mass-producing homes at an assembly-line pace.

At first glance, it looks like they’re creating ‘affordability’. But the truth is, they’re not building with buyers in mind—they’re building for volume, profit, and investor appeal.

• Instead of lowering prices, they manipulate affordability. A rate buy-down here, a free upgrade there—it’s all about keeping base prices high while making homes feel more affordable than they really are.

• These homes aren’t designed to hold long-term value. Builders are prioritizing speed and cost-cutting over quality, using cheaper materials and rushed construction.

• They’re building for investors just as much as for families. A huge portion of these homes aren’t even going to homeowners—they’re being scooped up by institutional investors and turned into rentals.

They aren’t planning neighborhoods for long-term sustainability. They’re pushing inventory to maximize profits, leaving buyers with homes that may not hold their value five to ten years from now.

Buyers Aren’t Showing Up—And Builders Know It

For all the talk about Houston’s market being strong, buyer activity tells a different story.

Mortgage applications are at a multi-decade low. That’s not just a blip—it’s a signal. Fewer people applying for loans means fewer people trying to buy homes.

So who is still buying?

• Wealthy buyers and investors

• People with significant home equity making cash-heavy offers

• Buyers who are only able to afford a home because of builder incentives

And who’s not buying as often?

• The middle class

• First-time homebuyers

• People who don’t have enough equity to trade up without taking a financial hit

When affordability is stretched this thin, people don’t just stop wanting homes—they stop being able to buy them.

A Looming Problem No One Is Talking About: Tariffs & Labor Shortages

Most conversations about Houston’s housing market focus on prices and inventory. But there’s another hidden issue—construction costs are about to possibly spike.

Tariffs on lumber could get more expensive this year. Since 60% of U.S. lumber comes from Canada, that’s a massive problem. If costs rise, builders will have to either raise prices or cut quality even more—neither is good for buyers.

Houston’s construction labor force is shrinking. Over 50% of workers in the industry are undocumented, and new construction job postings just hit their lowest level since 2008. Fewer workers = longer build times, more delays, and higher costs.

The Resale Market Is Stuck—And Sellers Are Struggling

It’s not just builders having a hard time. The existing home market isn’t exactly thriving either.

Sellers are still trying to get 2022 prices for their homes, but buyers aren’t biting. Homes are sitting on the market longer, price reductions are becoming more common, and many sellers are learning the hard way that this isn’t the market they thought it was.

Right now, over 50% of homes in Houston (new and resale) are selling below asking price. The average days on market has climbed past 60 and is still rising.

Houston’s Market Isn’t as Strong as It Looks—But You Still Have Options

Here’s the bottom line:

• Builders are holding back inventory and keeping prices high with incentives.

• The buyer pool is shrinking, and affordability is squeezing out regular homebuyers.

• The resale market is stagnant, with homes sitting longer and price reductions increasing.

• Tariffs and labor shortages could shake things up even more in 2025.

But that doesn’t mean you can’t make a smart move in this market. Whether you’re buying, selling, or waiting it out, understanding what’s actually happening gives you the power to negotiate, plan, and make informed decisions.

Thanks for Reading!

If you found this useful, send it to a friend who keeps saying they’ll move to Texas someday.

I’m Danielle, publisher of Houston’s #1 suburb-focused newsletter covering market shifts, builder incentives, and what’s really happening in real estate.

Houston’s housing market isn’t as simple as “now’s the best time to buy.” If you want real insight—without the sales pitch—let’s talk. [email protected]