More than 900 GHBA members attended the Economic Forecast Luncheon on Tuesday, January 28, 2025, at the Bayou City Events Center.
We were honored to have Mayor John Whitmire welcome our members and kick off the afternoon. Mayor Whitmire expressed his continued support of the homebuilding industry and thanked all GHBA members for their collaboration to create more housing opportunities. He also gave special recognition to GHBA-member Lisa Clark with W Land Development for her efforts as chair of the City of Houston Planning Commission.
“Houston is open for business. If you have other issues, I want to know about it, because we have a great city, and we’re moving in the right direction,” Mayor Whitmire said.
Advertisement
Following the mayor’s welcome speech, the GHBA celebrated two large donations to its Benefit Homes Project, benefitting HomeAid Houston, Operation Finally Home and the GHBA Charitable Foundation. Ellison Development presented a check for a $282,952 donation and Chesmar Homes broke all records with a $405,000 contribution to the Benefit Homes Project.
At that time, the keynote speaker and president and CEO of Community Builders Advisory Services (CBAS), Lawrence Dean, took the stage. In recent years, Houston has become an attractive city in which to live, work and play, not because of the city’s natural beauty, Dean joked, but because of the city’s strong job market. Houston’s Metropolitan Statistical Area (MSA) is projected to add between 320,000 and 680,000 residents by 2030, likely due to the market’s ever-growing job growth, Dean pointed out.
According to the U.S. Census Bureau’s seasonally adjusted total employment, the Greater Houston area ranks number two in the nation in terms of annual job growth, with 3,578,388 total jobs, an annual increase of 86,393 jobs at a 2.5% increase as of November 2024. As a result, housing demand is the highest in Houston compared to other cities in the nation. According to the U.S. Census Bureau, the Greater Houston area ranks number one in single-family building permits.
GHBA Member Survey Reveals Resilient Market
CBAS surveyed various councils within the GHBA to gather specialized data on each sector’s business performance and market sentiment.
The remodeling sector reported a notable rise in kitchen and bathroom remodels, driven by higher mortgage rates. Among the surveyed remodelers, 53% anticipate an increase in project volume for 2025 compared to 2024, with most jobs concentrated in central Houston – primarily inside Beltway 8, as well as west Memorial and inside Highway 8. The data also indicates that homes built in the 1990s and 2000s are undergoing the most remodels, a trend remodelers expect to continue throughout the year.
Among the surveyed custom builders, 63% reported a decline in contracted jobs due to 2024’s high mortgage rates. However, 50% anticipate an increase in home starts this year, while 38% expect volume to remain steady. The top three challenges impacting their business are rising interest rates, economic uncertainty and increasing material costs. Like remodelers, custom builders primarily operate in central Houston – mainly inside the Beltway, as well as west Memorial and inside Highway 6. Additionally, 75% of custom homebuilders believe the industry is becoming more competitive than ever before.
For volume builders, Dean noted that the Houston-Pasadena-The Woodlands market ranks first nationally in single-family building permits, according to the Houston MSA. However, with mortgage rates remaining high, housing affordability remains a key concern for both volume builders and homebuyers. While land costs continue to rise, homebuilders are maintaining affordability by expanding further beyond Houston’s city limits into areas such as Bay City, Brookshire, Montgomery, Walker County and Cleveland. A CBAS-provided map of the Greater Houston area highlights the region’s vast reach – spanning 121 miles from east to west and 139 miles from northwest to southeast. By developing in outlying areas, Dean explained, large homebuilders can address both affordability and land availability challenges.
In 2025, volume builders and developers are expected to face tighter margins due to rising land and lot costs, increasing material expenses and persistently high mortgage rates. Despite these challenges, Dean remains optimistic, as reflected in last year’s numbers with 18 Houston-area builders starting 1,000 or more homes in 2023 and the first half of 2024 despite cycle-peak mortgage rates.
Dean concluded his presentation with an outlook on the year ahead. Mortgage rates are expected to fall within the 5.80% to 6.80% range, according to projections from the National Association of Realtors, the Mortgage Bankers Association, Redfin and others – a notable shift from last year’s predictions and even recent forecasts. While mortgage rates remain difficult to predict, Dean emphasized that Houston’s strong job market plays a key role in housing stability. Resale inventory has normalized, following typical seasonal trends, and Houston’s demographics offer a promising outlook, with 42% of the MSA population within the prime homebuying age of 25 to 54 – a group that is expected to grow. As for home prices, forecasts are mixed, with Zillow projecting a 1.8% increase and Moody’s forecasting a slight decline of 0.5%.
This event wouldn’t have been possible without the support of our incredible sponsors, including Diamond Sponsor Zonda. Your partnerships help drive important conversations that shape our industry. With a resilient market, strong demand and dedicated industry leaders, the future of Houston homebuilding is well-positioned for continued growth.
Find more photo highlights online at ghba.org/photos.
About the Author
