Texas' affordable housing has fueled the state's massive population growth over recent years, according to a new report by Realtor.com shared with Newsweek, and it will continue attracting newcomers as inventory in the state surges.
"The state has grown rapidly in the last several years as people from across the country and across the world have seen what Texas has to offer," said Danielle Hale, chief economist at Realtor.com.
"In the years since the COVID-19 pandemic, the Texas economy has boomed, especially in high-demand industries like technology, education, manufacturing and construction," she explained.
"Already-scarce housing inventory from years of under-building was flooded with cash offers, and listing prices and rents soared. Texas has responded by building more and smaller homes to meet demand, helping the market settle and housing inventory climb back to pre-pandemic levels ahead of the nationwide recovery."
As they say, everything's bigger in Texas. And for at least the past five years, the state's population has been following this motto, getting bigger and bigger. Since 2020, the Lone Star State has added more than two million residents to its population count: it's now estimated to have 31.29 million residents, up from 29.15 million five years ago.
Over the course of last year alone, according to the latest data from the U.S. Census Bureau, Texas' population grew faster than any other state, adding a little less than 563,000 new residents between July 1, 2023 and July 1, 2024.
Why Are So Many People Moving To Texas?
According to the Realtor.com report, more than one in four homebuyers looking to purchase a property in Texas are coming from outside the state. A majority of those looking to relocate to the Lone Star State are from outside the country or from California—one of the most expensive housing markets in the nation.
Housing, jobs, and climate are the most common reasons people move to Texas from other states, Realtor.com found.
"The Texas economy is a model for other states," said Damian Eales, CEO of Realtor.com. "Residents are attracted to Texas first and foremost for its affordable housing, followed by its favorable climate and abundant jobs."
According to Eales, this growth will continue in the coming years, putting Texas on a path to "potentially become the largest state by the year 2045." At the moment, Texas is the second-largest state in the union after California, which counts nearly 39 million residents.
Why Are Homes So Affordable In Texas?
Despite a rise in home prices during the pandemic, when demand grew in the state due to the influx of newcomers, the median-price home in the state has remained cheaper than the national median for quite a while.
As of December 2024, the latest data made available by Realtor.com, the median listing price in Texas was $360,000, roughly $40,000 below the national median. By comparison, the median listing price of a home in California was $749,000, according to Redfin.
Almost half (47.5 percent) of all for-sale inventory in Texas last year was priced at $350,000 or below, against just 40.1 percent of national inventory.
Additionally, while home prices are still rising year-over-year at both national and state level, price growth in Texas is expected to soften drastically due to the flooding of new inventory in the market.
The state has been building more new homes than anywhere else in the country: last year, it approved 15 percent of all new house permits given in the U.S., "punching well above its 9 percent share of the U.S. population," Realtor.com wrote.
Texas is not only growing its inventory, alleviating the chronic supply shortage in the country's housing market, but it's also building smaller, cheaper homes. According to Realtor.com, the median newly constructed home on the market in the state was 2,073 square feet, down from 2,189 in 2020—a 5.3 percent decrease which allows for lower price tags.
Over the last two years, the share of new builds on the Texas market priced under $350,000 has grown while the shares of new builds priced from $350,000 to $750,000 and from $750,000 to $2,000,000 have both fallen.
In some of the markets which became the most overvalued during the pandemic, like Austin, experts expect to see potential price declines through the year as new inventory reaches the market.
What's Great For Newcomers Is Not As Good For Texans
While homes for sale in Texas are cheaper than in most of the country, and inventory is likely to improve affordability, buying a home remains a near-impossible dream for many in the state.
Despite the fact that prices are lower than the national average, they're still relatively high for Texas standards: the median listing price year-to-date in 2024 is roughly $80,000 higher than the 2019 average, Realtor.com reported. And with mortgage rates still hovering around the seven percent mark, homebuyers face an additional challenge.
Given the average mortgage rate and median listing price, the typical monthly housing payment in Texas was $2,100 in December, assuming a 10 percent down payment, the website reported.
The median household income in Texas was $76,292 between 2019 and 2023, according to the latest Census data. During the same time frame, an estimated 13.7 percent of Texans were living in poverty. In 2023, the median household income for the average U.S. household was $80,610; in California, it was $96,334.
"Though Texas offers considerable inventory in lower price tiers, the price distribution of for-sale homes does not match well to the state's income distribution," Realtor.com wrote. "Fifty-one percent of Texans make less than $75,000 per year, but just 17 percent of for-sale inventory is affordable for this income level. Even for 80th percentile earners, making up to $150,000 per year, just 66 percent of for-sale inventory is affordable."
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