Austin-Round Rock metro leads Texas in housing construction, 3rd highest apartment construction nationally

AUSTIN (KXAN) — The Austin-Round Rock-San Marcos metropolitan statistical area (metro) has the third highest multifamily construction and highest single-family construction in the U.S., according to reports from RentCafe and Construction Coverage. However, the Austin Board of Realtors (ABoR) reported in 2023 that the metro is still short by tens of thousands of homes.

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Industry researchers at Construction Coverage said that the metro authorized the most housing units per 1,000 existing homes than any other in 2022 by a significant lead. The already larger Dallas and Houston metros both led Austin in total number of new units authorized.

RentCafe ranked Austin third in the nation after New York City and Dallas metros, with Dallas in second by three units. According to its report, the metro is expected to add 21,506 new units by the end of 2024.

“In particular, the city of Austin alone is set to welcome an astounding 12,157 new apartments by year-end, or more than 56% of all expected deliveries in the metro,” the report states.

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The report also looked to the future, claiming that the metro will add 80,046 new apartments between 2024-2028. This is around 8,000 more than were built from 2019-2023.

But will the pace of construction meet the region’s housing shortage? According to a 2023 report from ABoR, Austin came up short by nearly 215,077 homes.

“There’s not enough supply, and we’ve known that our supply has not met the demand that we’ve had across this region for a long time,” said ABoR CEO Emily Chenevert, in a 2023 interview with KXAN. “Most importantly, I would say overhauling the process of developing land and building houses here to just make it more efficient and less costly than it is today.”

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Some of the changes suggested by Chenevert were part of the city of Austin’s HOME initiative, which will allow for more housing density in the city. Since 2023, available housing inventory has increased significantly, but prices haven’t budged much.

Ken Simonson, chief economist for the Associated General Contractors of America, said that the Austin metro area is “one of the strongest growing markets,” but that there are obstacles to meeting the demand for housing.

“It’s been very challenging for the construction industry…to get land that is ready to be built on, to get the permits, to get the infrastructure in place, the utilities and so forth,” Simonson said. “There’s still a major challenge getting key electrical equipment…if you don’t have power, you can’t rent out the building or turn it over to the home buyer.”

Taylor Jackson, CEO of Home Builders Association of Greater Austin (HBA Austin), said that zoning regulation and the city of Austin’s subdivision process are considerable barriers that slow construction and make housing more expensive.

“The regulatory cost is at $93,870 per new home. And those are regulatory costs from the county, from the city,” Jackson said. “As we look at growth as a city, how can we balance those regulatory costs for each new home will also provide some affordability and also the supplies that are available?”

Jackson said that HBA Austin is in talks with the city of Austin about how to ease the regulatory burden on builders, but noted that those talks don’t include anything related to the health and safety of workers and the homes.

“We’re mostly focused on removing those barriers that prohibit the flexibility of building the missing middle housing,” she said. “More so than anything else our focus is really to provide gentle, gradual density for, and housing for, teachers, first responders and families.”

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Another major part of the housing situation is labor, the people who build new housing. The metro can celebrate good numbers there, with August’s report showing a “new record” high of 87,700 construction workers in the metro that outpaces the rest of the country, Simonson said.

“Austin-Round Rock metro area has consistently been adding jobs at a greater rate than the US construction industry,” he said. “In the last 12 months, for instance, the area has added more than 3,000 construction jobs, more than a 4% increase. Anybody who is looking for a career choice or a career change–they would do well to look at construction.”

Even if construction catches up to our “missing” homes number, there’s still value in building more.

“As we have more people moving and more job growth here in Austin, we also need to supply that housing demand that comes along with it,” Jackson said. “The variety of housing really does impact the affordability. It really allows for people who want to enter the market to buy a home easier and faster.”

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