Low housing inventory pushes single-family housing prices up due to demand, said Lawrence Dean, president and CEO of Community Builders Advisory Services, a housing market research firm.
“I would expect to continue to see home prices, even in the oldest sections ... [of Sugar Land], continue to appreciate very strongly because it’s a highly desirable area and doesn’t have much new stock coming in,” he said.
However, PulteGroup’s development in Sugar Land’s extraterritorial jurisdiction and continued growth in Sienna could create some more affordable single-family homes in the area, Dean said.
Two-minute impact
A June 2023 report from the Chamber of Commerce, a product research company, showed the Houston metro had the most new residential home permits issued in 2023 among the largest metros in the U.S. Despite these 23,062 new home permits issued, the Houston area’s housing inventory is still lower than it was pre-pandemic.
The housing inventory, the time it would take to sell all homes on the market, in three Sugar Land and Missouri City submarkets averaged 3.87 months in August—lower than the pre-pandemic average of 4.92 in August 2019, according to data from the Texas Real Estate Research Center at Texas A&M University.This is below the six months of inventory real estate experts consider a balanced market. The lack of available land in the Sugar Land area, which city officials said is around 4%, makes it difficult to bring new housing stock to the area, Dean said.
“From Katy, you're seeing people go to Fulshear and out that way, and then from Sugar Land it seems like it's going out down [Hwy.] 59,” he said. “So as far as affordability, that's pretty much what it is. If you want the entry-level price, you're just going to have to pretty much go a little bit further out.”
Digging deeper
Median home prices in the Missouri City area rose as much as 43.25% between August 2019 and August 2024, while Sugar Land West rose as high as 51.4%, according to Texas Real Estate Research Center data. Meanwhile, Sugar Land South fell below both Houston and Texas at 31.97%.
In the third quarter of 2024, the Houston housing market experienced a positive shift in housing affordability for the first time since 2020, rising year over year from 35% of households being able to afford a median-priced home to 38%, according to a news release from the Houston Association of Realtors.
Compared to the Houston region, a larger percentage of households in the Missouri City and Sugar Land area can afford to purchase a median-priced, single-family home, per HAR data.
More housing inventory could aid in balancing out housing prices, Dean said.
About 4,000 more units are planned to join the 10,500-acre Sienna community near Missouri City by its 2032 build-out, said Alvin San Miguel, senior vice president of Johnson Development. The homes will start in the low $300,000s, with lot sizes beginning at 35 feet.
Sienna’s new homes are coming in the southeast area of the master-planned community, with 500-550 home sales yearly, San Miguel said.
“The best we can do is try to buy land and develop it as efficiently as possible so that we can turn that to our builders and they can supply affordable housing to buyers,” he said.
Meanwhile, PulteGroup will bring 2,335 housing units to Sugar Land's extraterritorial jurisdiction, located south of FM 2759 and east of FM 762. A development agreement Sugar Land City Council approved in late 2023 will allow the to city to annex the property in the future.
PulteGroup broke ground on the roughly 960-acre Ryehill community in June, and the first homes are set to come online in mid-2025, with an average of 400 homes completed each year, said Lindy Oliva, president of PulteGroup’s Houston Division.
"[The city of Sugar Land] allowed us to provide some smaller lot sizes so that we could get to what I would call a first-time, move-up home and/or potentially a starter home for a lot of folks as well," she said. "That has helped us get to a little bit more affordable price point for our middle-income consumers. These are not low-income homes, and they are certainly not super affordable homes, but they definitely would hit the middle-income consumers."
While home price ranges for the community aren't yet available, Ryehill will offer a minimum lot size of 40 feet wide, Oliva said.
Zooming out
The State Comptroller’s Office reported Texas’ population growth has outpaced homebuilding since 2020, resulting in a widespread housing shortage, Community Impact reported. The Houston-Pasadena-The Woodlands region’s population grew 360,649 between 2020-23.
Meanwhile, Up For Growth, a national housing policy organization, reported in 2023 that Texas needs about 306,000 more homes to meet demand. In the Houston area, 61,971 is needed to meet demand.
“[Texas is] issuing more building permits for single-family homes than any other state,” Will Counihan, who leads the comptroller’s data analysis and transparency department, said at an Aug. 27 event. “So it’s not that people aren’t trying to build [houses]. I think one of the big issues that we’ve found is that they're perhaps not building the right types of houses, specifically housing for low- and middle-income Texans.”
Texas could make it easier to build homes in commercial areas and reduce the minimum lot size for single-family residences, said Nicole Nosek, the founder of Texans for Reasonable Solutions, an organization that aims to solve the housing shortage.
Lt. Gov. Dan Patrick, who oversees the Senate, and House Speaker Dade Phelan directed lawmakers to look into potential zoning changes for the 89th Legislature, Community Impact reported.
Meanwhile, the Federal Reserve has cut its federal funds rate, the amount it charges banks, .75 percentage points since September.
Dean said this could encourage more home construction, as builders and developers can finance projects for less. It could also influence lower mortgage rates, which would push more homebuyers into the market.
However, homebuilders adding more new inventory is the most significant way to address home affordability, he said.
Contributions by Hannah Norton & Aubrey Vogel.
