In the Houston suburbs, a new-home market sizzles 

On a quiet street wedged between grassy fields and half-built subdivisions, a lineup of pristine model homes offers would-be buyers a taste of life in Jordan Ranch, one of several expanding master-planned communities in the Houston suburbs.

“They’re just neighborhoods popping up all over the place,” said Houston-area real estate agent Lauren Flathouse, who also moved into a new home nearby, about 35 miles west of downtown Houston. “You’ve got beautiful amenities, amazing schools … it’s just a very family-friendly community.”

She said builder incentives like interest rate buydowns and the relative affordability of the area have also been attractive for prospective homebuyers.

The western zone of greater Houston — which includes Katy, Texas — had 10,000 new home starts in 2023, which is more than most major housing markets, including Las Vegas, Nashville and Seattle, according to real estate data firm Zonda.

In all of greater Houston, construction began on more than 35,000 new homes in 2023, making it second in the country for new home starts, beaten only by Dallas-Fort Worth.

New construction is playing a bigger role in the real estate market for single-family homes, thanks to higher interest rates and limited inventory that have many homeowners staying put right now — especially folks who purchased during the pandemic buying frenzy. Historically, new homes have made up about 10% of the market. Nowadays, it’s more than 30%, according to the National Association of Realtors.

And when it comes to new builds, the Texas suburbs have relatively cheap land left to expand the suburbs outward as newcomers move to the state from abroad and from other parts of the U.S. 

“We have some right now that are coming from Portland [Oregon],” said Houston-area real estate agent Daniela Sumbera. 

“Their houses are worth about a million dollars, but they’re roughly maybe 1,400 square feet, and what they could buy down in the Houston area is so much more different. You can easily find a 4,000-square-foot house on a quarter of an acre with all the bells and whistles,” she said. “They are completely baffled by how much home you can get for a lot less.”

Her firm’s contracts are roughly 60% to 70% new homes.

Though Houston’s housing starts have not been immune to the cooling effects of interest rate hikes, Bryan Glasshagel with Zonda said the negative impacts were less pronounced in Houston than in other Texas markets, like Austin and San Antonio.

And new construction is expected to increase in 2024.

“The builders that we’re talking to in the market indicated that they think start activity likely will be up more than 10% this year from where they ended in 2023,” Glasshagel said.

And long term, it’s probably still not enough, he said.

“With the population growth, the household growth and job growth that’s expected for Houston, I think you can look at this market as being a little bit supply constrained as we move forward — not significantly, but not quite in balance either,” he said.

And whether the suburbs are what homebuyers originally had in mind, it’s where people are moving. Sometimes out of financial necessity.

“A lot of people, unfortunately, are having to make the decision that, you know, ‘What for the sake of my mortgage, and my finances, I have no choice but to move to the northwest quadrant of Houston to make a new home affordable for me,’” said Matthew Reibenstein, president of the Greater Houston Builders Association.

In the Jordan Ranch neighborhood, homes start at about $300,000. And while it may be far from the urban core of Houston, these new builds are accounting for a new way of life — and work.

“We offer a choice of a study or a bedroom, but a lot of people are using that choice as a study,” said Richard Matlock, a local builder. “It’s a custom option that you can get in your home, but if we’re building an inventory home, it’s going to have a study in it.”

When he started building homes 25 years ago, he said studies were a luxury item. “But now it’s just almost in every home,” he said.  

While the price of a spacious suburban home may be a long commute (Houstonians joke that Houston is an hour from Houston), developers are doing all they can to sell the suburbs — from at-home studies and mortgage buy-downs to bike paths and sometimes a neighborhood lazy river.