Julia R. Cartwright is a senior research fellow in law and economics at the American Institute for Economic Research.
Myriad forces are driving America’s housing crunch, but one of the most significant and most fixable is restrictive zoning: a maze of local land-use rules that add costs and delays to building new homes. Texas legislators may have found a pragmatic solution that pushes certain housing projects forward without endless hearings and rezoning battles.
Early evidence suggests the Lone Star State’s embrace of by-right zoninghas allowed developers to build more housing without requiring a sweeping overhaul of local zoning codes. If other states follow suit, they could ease the housing shortage while growing their economies and populations.
While estimates of the U.S. housing problem vary widely, the squeeze is undeniable. The housing deficit is driven largely by local permitting red tape, restrictive zoning that often jacks up construction costs and prevents housing from being built. Estimates suggest zoning restrictions and land-use regulations account for 24 to over 40 percent of construction costs for new single- and multifamily housing, respectively.
A 2019 analysis of 11 U.S. cities and suburbs found that 75 percent or more of residential land was zoned exclusively for detached single-family homes. While this may preserve neighborhood aesthetics — think: no rowhouses, duplexes, condominiums or apartment buildings — it limits the supply of starter homes and makes it harder for newcomers to get their feet in the door. Restrictive zoning has helped push the median age of first-time home buyers to about 40, an all-time high.
Unsurprisingly, the cities with the strictest zoning systems tend to have the highest housing costs. The average monthly rent in San Francisco and New York City is $3,743 and $4,068, respectively, far above the national average of around $2,000.
Houston offers a sharp contrast. The city operates without a traditional zoning code, relying instead on building codes, development ordinances and private deed restrictions to guide land use. Houston’s approach is not a perfect fix, but its flexibility has helped keep housing relatively affordable, with average rent around $1,875.
Texas lawmakers resolved to implement such a model statewide. Effective September 2025, cities with more than 150,000 residents in counties with more 300,000 must allow by-right multifamily housing on commercially zoned land. In practice, this means developers can build projects with three or more units and even mixed-use developments without having to go through lengthy rezoning battles or costly discretionary approval processes.
Under the previous system, most Texas developers had to seek rezoning approvals, obtain zoning variances and potentially attend lengthy public hearings before construction could begin. This would delay projects for months or even prohibit them outright, introducing uncertainty into development decisions. Projects that technically complied with planning guidelines could still be hindered or blocked if they encountered political opposition during public hearings. By-right zoning simplifies the process: If a project meets predetermined standards for density and height, it can move forward without discretionary approval.
Early signs suggest the policy is already working as planned. Within two months of the law taking effect, Dallas reportedly received roughly 60 inquiries from developers about potential new housing projects. Much of the developer interest centers on “missing middle” housing, small buildings that bridge the gap between single-family homes and large apartment complexes. These smaller projects can add housing supply while blending more naturally into existing neighborhoods. The reform applies to 19 of Texas’s largest cities, including Dallas, San Antonio, Austin and Irving.
The policy is not without challenges. Commercial districts may require infrastructure upgrades to accommodate residential density, including improvements to water systems, sewer capacity and transportation networks. Local opposition could also persist in subtler ways, as cities still control permitting processes and utility connections that could slow development even without formal zoning hearings.
Even so, the broader economic stakes are clear. Texas has been one of the fastest-growing states in the country, gaining two congressional seats after the 2020 census. The state gained nearly 813,000 residents through domestic migration between 2020 and 2025. Meanwhile, New York and California each lost one congressional seat after the recent census, and their delegations are projected to continue shrinking. Between 2020 and 2025, the populations of California and New York lost roughly 1.7 million and 1.1 million residents through domestic migration, respectively. There’s a housing lesson to be learned from those population shifts. States that make it easier to build homes attract workers, businesses and investment. Those that don’t drive residents elsewhere.
Texas is not redesigning the housing market from the ground up. It is embracing a simpler idea: Let developers build housing when projects meet clear rules in areas not originally intended for housing. If other states adopted similar reforms, they could ease housing shortages, support economic growth and make it easier for younger Americans to own their first home.
Sometimes solving a major economic challenge does not require an elaborate new policy. It simply requires local governments to step aside.
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