To Address Housing Shortage, Texas Limits Local Regulations

13 June 2025

The widening housing shortfall in a state with several of the country’s top homebuilding markets prompted Texas lawmakers to look for ways to juice production.

The Texas Legislature passed several laws in the recent session that were designed to help housing grow on pace with population as the state’s housing shortfall grew to 319,000, according to the housing policy nonprofit Up For Growth. Measures approved this session to address the shortage mostly aimed to increase residential supply by reining in local regulations.

Texas led the nation in single-family permits in 2023, according to the Texas Real Estate Research Center at Texas A&M University. However, burgeoning supply hasn’t lowered prices, and the Texas housing market is becoming less affordable.

The average home price ratcheted up above $400,000 for the first time in 2022, according to the center. Sales have stagnated since then, but the average price has continued to tick up.

Here are some of the legislative measures approved this session that are meant to increase housing supply.

Senate Bill 15 aimed to fit more homes in less space, forbidding cities from requiring that residential lots be larger than 3,000 square feet in subdivisions at least 5 acres.

Another bill on the governor’s desk will make way for homes in commercial areas. Under SB 840, authored by Texas Sen. Bryan Hughes, a Republican from Mineola, Texas’ biggest cities must allow residential development in nonresidential zones.

House Bill 24, sponsored by Hughes and prioritized by Speaker of the House Dustin Burrows, aimed to make it easier to get residential developments approved by weakening protests from nearby property owners. Under current law, if a builder seeks to rezone a property, and 20 percent of property owners affected by the proposed change protest it, the local governing body needs a supermajority to approve the change. HB 24 upped the protest requirement for residential developments to 60 percent of the neighbors and lowered the approval requirement to a simple majority.

SB 785 forbade local governments from arbitrarily requiring special permits for manufactured homes built to U.S. Department of Housing and Urban Development standards. Under the law, which will take effect next year, municipalities may not impose specific restrictions on HUD-code manufactured homes that don’t also apply to other residential property in the same zoning classification.

SB 1567 barred college towns from capping the number of occupants of a dwelling based on age, familial status, occupation or relationship status. The law only applies to home-rule municipalities that encompass or neighbor a large university and have a population of less than 250,000.