Houston, once a leader in apartment construction, is seeing a significant slowdown in 2025. According to national apartment search site RentCafe, the city is set to deliver just 14,439 new apartments in 2025 Fan alarming 37.6% drop compared to the previous year. This comes as the city, which had seen a record 49,149 new apartments in 2023-2024, grapples with higher construction costs, rising interest rates, and flat rents.
While Houston’s apartment market is cooling, Texas as a whole remains the leader in apartment construction across the United States. Despite this, Houston’s slowdown in growth is becoming evident as rivals Dallas and Austin continue to see strong apartment development. In 2025, Dallas is set to deliver nearly 29,000 new apartments, while Austin will add over 26,000 units, making both cities some of the top markets in the nation.
Why Houston’s Apartment Market Is Slowing
Several factors are contributing to the slowdown in Houston’s apartment construction. Higher interest rates have made it more expensive for developers to finance projects, while rising construction costs are also taking a toll on new developments. In addition, the influx of new apartments over the last two years has created an oversupply, which has suppressed rent growth. In fact, rent prices have been flat since 2022, and average effective rents in Houston were approximately $1,277 in the second quarter of 2025.
The decrease in new apartment construction could ultimately help balance the market, with fewer new units potentially putting upward pressure on rents. Doug Ressler, senior analyst at Yardi Matrix, predicts that the slowdown in supply, coupled with Houston’s growing demand for housing, will likely lead to increased rental prices. Yardi Matrix forecasts that average rents in Houston will grow 2.6% to 2.7% annually from 2025 to 2027.
Texas Leads in National Apartment Construction
Despite Houston’s slowdown, Texas continues to dominate the national apartment construction scene. With more than 81,400 new multifamily units set to open across the state in 2025, Texas is leading the country in new apartment developments. Dallas, in particular, is seeing a surge in new units, making it the second-largest market in the U.S. for new apartments, behind only New York.
Both Dallas and Austin are benefiting from business-friendly environments, affordable living, and more relaxed zoning laws compared to coastal cities. While Dallas is expected to deliver fewer apartments in 2025 than the previous year, its construction boom still far outpaces Houston’s. Austin, though cooling from its earlier growth, remains a strong contender for new apartment developments.
Houston’s apartment construction market is expected to remain slower than its peers in Texas, with Yardi Matrix predicting only around 11,000 new units will be delivered in 2026. This decrease in new supply, combined with rising demand, could lead to upward pressure on rents, making it a potentially more profitable market for landlords moving forward. However, it remains to be seen whether the slowdown in development will be enough to reignite rapid rent growth in the area.
As developers shift focus to other booming Texas cities, Houston’s apartment market will need to adapt to new challenges. Nevertheless, the city's real estate landscape still holds potential, with opportunities for growth and investment as the market stabilizes in the years to come.
