New Texas Laws Put State on Path to Improved Housing Affordability
7 bipartisan bills approved this year enact proven reforms
Amid a national housing shortage, Texas lawmakers took decisive action in 2025, passing seven bipartisan bills that will make it easier to build more homes. The policies embodied in the measures are based on strong evidence and have worked as intended where implemented.
The changes are meant to improve affordability in three primary ways: reducing barriers to permitting and construction that drive up development costs, increasing the overall housing supply, and expanding consumer choice so buyers and renters don’t have to spend more than they can afford.
The United States has reached an all-time high in rents, prices, and homelessness in recent years. Why? Primarily because there simply aren’t enough homes. And the homes that do get built are often not those that consumers necessarily seek but those that inflexible local regulations favor or even mandate.
In Texas, experts estimate the deficit at more than 320,000 homes. That shortage helped push the average cost to buy a home in Texas up 39% from January 2020 to January 2025. Meanwhile, large swaths of land in existing cities could not be used for housing because local authorities had zoned these areas for commercial use only. And rigid zoning codes, permitting processes, and building codes drove up costs for housing where it could be built.
In response, the seven bills passed in Texas reduce several specific regulatory barriers that were driving up costs, with many removing multiple barriers. Five address restrictive zoning. Three limit mandates on parking beyond what developers would typically build based on consumer demand. Two permit existing buildings to be used more flexibly to increase available housing. And four ensure that certain types of housing can be built by-right, meaning there is a quick, clear permitting process.
There is strong evidence that all seven policies will be effective at improving housing affordability.
Texas Lawmakers Enact Laws to Address Housing Shortage and Improve Affordability
A strong evidence base undergirds the package of bills approved in 2025
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Apartments allowed on commercially zoned land. This law brings apartments closer to jobs by allowing the development of mixed-use and multifamily housing on properties zoned for commercial use. An analysis by The Pew Charitable Trusts found that making it easier to build such housing near workplaces and stores can sharply slow rent growth. A 2023 Pew survey also found that 75% of Americans support such a policy.
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Homes allowed on small lots. The “starter homes” legislation, which allows homes to be built on smaller lots of at least 3,000 square feet, should enable more middle-income households to become homeowners. It applies only to generally vacant parcels of at least 5 acres in Texas’ large and midsize cities. After Houston legalized smaller lot sizes in 1998, homebuilding flourished, and the new homes built cost less than those on large lots. Analysis of most U.S. metro areas also shows that homes on small lots consistently cost less than those on large lots.
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Simplifying rezoning. This law reduces barriers to land-use changes by strengthening property owners’ right to use their land to create housing by ensuring that a small minority of nearby landowners can’t thwart new construction. This measure both strengthens property owners’ rights and should shorten pre-development timelines, thereby improving housing affordability by enabling more homes to be built.
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Removing barriers to office-to-residential conversions. This law greatly simplifies office-to-residential conversions by removing the need for a rezoning and other regulatory obstacles, such as the need to add more parking on an already-developed site. Houston, Dallas, and Austin all have office vacancy rates well above the national average, and these changes should make it easier to convert some of that space to apartments. Conversions can also reduce traffic and residents’ transportation costs by adding housing in downtowns, near jobs and commerce. Pew’s survey found that 81% of Americans support this policy.
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Removing the two-stair mandate: This law updates the state’s standard building code language to remove the mandate for a redundant second stairway in small apartment buildings. Research by Pew found that this reform can reduce construction costs by an estimated 6% to 13% for these buildings while enabling them to fit on small parcels, including above an individual store or restaurant. This research also found that the fire-safety track record of these single-stair buildings—up to six stories and 24 units, as outlined in the legislation—is as strong as that of other housing.
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Allowing use of manufactured housing. This measure expands the areas where manufactured housing can be located. Pew’s research has found that manufactured housing has lower construction costs than site-built housing, especially for smaller homes, while maintaining similar quality. Expanding its availability boosts access to homeownership for households with lower-than-average incomes.
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Allowing home sharing: A so-called “Golden Girls” law prevents jurisdictions from restricting people from sharing homes based on whether they are related. It applies only to jurisdictions under 250,000 people with large colleges or universities, which should allow more efficient use of existing housing stock. Rooms in shared houses already list for lower prices than nearby apartments, and this change will make more such low-cost rentals available. This approach also improves affordability by relieving pressure on the nearby housing stock in college towns. |
Several states have taken major steps forward in recent years to remove regulatory barriers to housing, but Texas’ 2025 legislative session stands out for enacting so many strong, evidence-based measures at once to deal with a serious housing shortage.
The bills all had strong bipartisan support, with each earning majority backing from both Republicans and Democrats in the Senate, and five earning majorities from both parties in the House of Representatives. The coalition supporting the bills was also broad, ranging from business and homebuilders associations to groups representing ethnic and racial minorities, faith-based organizations, groups dedicated to property rights and free markets, and progressive groups focused on improving access to housing in job-rich cities.
As policymakers in other states seek to tackle their housing shortages, improve affordability, bring homeownership within reach, and reduce homelessness, Texas offers a strong model to replicate.
Alex Horowitz is a project director and Chase Hatchett is a principal associate with The Pew Charitable Trusts’ housing policy initiative.
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