"For builders, particularly in the Sun Belt, the challenge from the get-go in 2026 will be to work through surplus entry-level inventory. As monthly-payment affordability pressures from high mortgage rates and home prices plague first-time buyers, solving this supply imbalance will only occur gradually. The wait, however long, will be both a test of patience and financial tolerance. Builders are clearly taking action."
"There is evidence that Texas builders may be pulling back on new construction more than builders in most other states, signalling a correction. Homebuilders in the Dallas-Fort Worth metro, for example, started 17.7% fewer homes year-over-year in the last quarter of 2025. Housing starts nationally declined by 7.8% year over year in October 2018. Census data also indicate that single-family building permits issued statewide in Texas declined by approximately 10.3% between January 2025 and October 2025, exceeding the national decline of 7.0%."
Builders face a surplus of entry-level inventory, with first-time buyers constrained by monthly-payment affordability from high mortgage rates and home prices. The supply imbalance is expected to correct only gradually, requiring patience and financial tolerance. Builders are responding by slowing new construction, reducing permits and starts to rebalance supply. Texas shows pronounced pullbacks: Dallas-Fort Worth starts fell 17.7% year-over-year in late 2025, and statewide single-family permits declined about 10.3% between January and October 2025, outpacing the national 7.0% decline. Excess entry-level supply in Texas began to build up in 2022.
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