For builders, notably within the Solar Belt, the problem from the get-go in 2026 will probably be to work via surplus entry-level stock. As monthly-payment affordability pressures from excessive mortgage charges and residential costs plague first-time consumers, fixing this provide imbalance will solely happen step by step.
The wait, nonetheless lengthy, will probably be each a check of endurance and monetary tolerance. Builders are clearly taking motion. In Texas, a state with an outsized surplus of entry-level stock, one decisive step builders have taken is to decelerate new building, slicing again on each new permits and begins.
John Winniford, President of Texas-based First America Properties, advised The Builder’s Every day in an interview that a lot of the state’s extra stock is within the entry-level section.
First America, which builds entry-level properties in Houston and San Antonio, with plans to quickly broaden into Dallas and Austin, has itself reduce on new manufacturing for its major buyer section.
When requested if he believes that the oversupply of properties in Texas will right itself over time, Winniford mentioned that he does, pointing to a slowdown in begins.
“It does seem like, slowly, we’re starting to see some enchancment. However once more, except we see a major shift in client habits, it’s going to proceed to take a while to work via,” he defined.
New residence building slows as builders reduce
There may be proof that Texas builders could also be pulling again on new building greater than builders in most different states, signalling a correction.
Homebuilders within the Dallas-Fort Value metro, for instance, started 17.7% fewer homes year-over-year within the final quarter of 2025. Housing begins nationally declined by 7.8% 12 months over 12 months in October 2018. Census knowledge additionally point out that single-family constructing permits issued statewide in Texas declined by roughly 10.3% between January 2025 and October 2025, exceeding the nationwide decline of seven.0%.
Based on Winniford, extra entry-level provide started to construct up in Texas in 2022, when mortgage charges started to extend.
“Builders started to give attention to constructing both smaller properties or discovering methods to scale back the entire price of properties. So I believe charges had been an enormous driver of pushing builders to construct and add extra provide into that entry-level or first-time purchaser market,” he mentioned. Furthermore, throughout these early interest-rate-volatility days, consumers had been exhibiting a choice for move-in-ready spec properties, so many homebuilders elevated spec begins to fulfill demand amongst these extra skittish, rate-sensitive consumers.
Is demand bettering?
Some public builders, together with Beazer Properties and PulteGroup, famous on late January earnings calls that demand and visitors had elevated since mid-December, at the least nationally. Winniford mentioned he sees the identical pattern in San Antonio and Houston, although it’s unsure how lengthy it’ll final.
“Now we have seen an upward pattern in visitors within the final six weeks or so, and that definitely is constructive. The actual query is, is it sustainable? Are we getting only a slight bump in client habits due to seasonality, or is it a pattern that could be extra sustainable, that is likely to be resulting in, probably, somewhat bit higher spring promoting season than we initially anticipated? I believe it’s nonetheless somewhat too early to inform,” he mentioned.
Winniford, like many different builders, notes client confidence as the important thing variable within the demand equation. A rise in client confidence may present the most important enhance to entry-level consumers, the section most delicate to affordability constraints.
What the general public builders are saying about Texas
Executives from a number of public builders just lately referred to as out Texas as one of many tougher homebuilding environments nationally within the brief time period, largely on account of an oversupply of recent properties.
This provide imbalance pushed costs within the 4 largest Texas metro areas unfavorable between November 2024 and November 2025, in accordance with knowledge from Zillow. These markets embrace Austin (-6.01%), Dallas (-3.86%), San Antonio (-2.65%) and Houston (-1.9%).
Jon Jaffee, former Co-CEO at Lennar, cited “elevated stock” as the principle cause costs fell in these markets throughout an earnings name final March.
“Basically, homebuyers in Florida and Texas, our two highest quantity states, wanted extra assist than most different markets across the nation. We would have liked extra incentives in Florida and Texas markets to help consumers in reaching mortgage funds they’ll afford,” he mentioned.
Ryan Marshall, PulteGroup’s President & CEO, mentioned throughout a This fall 2025 earnings name in January that Texas was one of many firm’s most troublesome markets.
“We closed out the 12 months with our Texas and West markets persevering with to expertise sluggish demand traits, though we could also be seeing some indicators of bottoming in Dallas and San Antonio,” he mentioned.
In July, Marshall equally pointed to Dallas and Austin as troublesome markets for Pulte.
Paul Romanowski, President and CEO at D.R. Horton, referred to Texas as “uneven” and market-to-market throughout an October earnings name. With out specifying which areas had been underperformers, he mentioned that some main markets “nonetheless have an elevated stock stage that we and the trade have to work via within the coming months.”
M/I Properties CFO Phill Creek mentioned in January that Texas was combined, and defined that Dallas and Houston have carried out effectively, whereas Austin and San Antonio are weaker. Throughout This fall, M/I Properties posted $51 million in impairments, primarily from entry-level communities with a median promoting value of under $375,000. Most of these communities had been situated within the San Antonio and Austin markets.
Is a post-bottom uptick within the Texas market within the works?
Regardless of troublesome market situations final 12 months, residence costs in giant Texas markets are anticipated to extend in 2026. These forecasts, mixed with robust inhabitants progress and a moderation in new residence begins, may sign an upcoming stabilization and higher days forward for the Lone Star State’s homebuilding market.
A 2026 home price forecast from Realtor.com forecasts that residence costs in Austin (+2.0%), DFW (+1.8), Houston (+0.4%) and San Antonio (+0.2%) may all transfer up in 2026. Texas A&M College equally forecasted a 1.3 p.c improve within the median residence value in Texas this 12 months.
Winniford is optimistic in regards to the state’s ongoing financial enlargement and inhabitants progress. Texas added 391,243 people between July 2024 and July 2025, rising by 1.2%, practically 2.5 occasions sooner than the nationwide common. The one states with the next progress share had been South Carolina, Idaho and North Carolina.
Texas moreover stays extra inexpensive than many different states within the nation, which is one other draw for folks coming from out of state. First America Properties’s Lexington Heights group within the Houston suburb of Willis, for instance, affords a 3-bed, 2.5-bath mannequin beginning at $309,839.
Costs have gone up significantly because the pre-COVID period, however out-of-state movers from high-cost markets in California, Colorado, New York and past see Texas as a discount as compared.
“In case you look nationally…it’s nonetheless very inexpensive to reside right here within the state of Texas. That’s why I believe Texas is so fascinating in the long run,” Winniford mentioned.
