U.S. housing starts were a bit of a mixed bag in the first quarter of 2025. Some markets surged. Others stalled. And builder confidence? Wavering.
Texas Still Leads
The Lone Star State dominated again:
Dallas: No. 1 with 47,107 starts
Houston: No. 2 with 38,822 starts
San Antonio: Up 14% YoY, landing at No. 4 with 18,624 starts
Phoenix also impressed, with starts up 19% YoY.
Why Texas thrives: “Texas is a market that is supported by strong fundamentals. Migration and a healthy labor market support housing demand, while land availability and lax government regulations allow for ample new construction,” said Ali Wolf, chief economist for Zonda and NewHomeSource.
Not all Texas markets are trending upward, though. Austin’s starts fell 10% to 15,851. Wolf called it a post-pandemic correction.
“The (Austin) market was a pandemic darling, with people moving to the metro in droves,” she said. “Austin ended up growing too fast for its own good, though. The resulting impact was congestion and high home prices. So consumers have pulled back from the market, and as a result, builders have pulled back from building.”
Biggest Drops
Jacksonville and Riverside/San Bernardino: Both down 17% YoY
Wolf cited high interest rates and worsening affordability: Jacksonville’s median property tax payment is up 59% in five years - third-highest increase among major U.S. cities. That’s the third largest property tax increase among America’s major cities since 2019, behind only Indianapolis and Atlanta.
The Bottom Line:
15 of the top 25 markets saw more starts than Q1 2024
10 markets saw declines
Translation: Still a mixed bag.
Builder sentiment sours
40% of builders in March said “demand is slower and causing concern”
Just 5% said the same last March
While Wolf doesn’t believe that souring sentiment had a huge impact on housing starts in Q1, she warned it could be the tip of the iceberg: “If demand doesn’t pick back up, we should expect more softening in new construction in the second quarter.
“Ultimately, we know that sentiment can turn on a dime, but we are at least waving the yellow flag in many markets across the country.”
