Austin’s surge of new housing construction drove down rents

After decades of explosive growth, Austin, Texas, in the 2010s was a victim of its own success. Lured by high-tech jobs and the city’s hip reputation, too many people were competing for too few homes. From 2010 to 2019, rents in Austin increased nearly 93%—more than in any other major American city. And home sale prices increased 82%, more than in any other metro area in Texas.

But starting in 2015, Austin instituted an array of policy reforms aimed at encouraging the development of new housing, especially rentals. The city changed zoning regulations to allow construction of large apartment buildings, particularly near jobs and transit. In 2018, voters approved a $250 million bond measure to build and repair affordable housing. Permitting processes were reformed to speed development and reduce costs.

The efforts worked. From 2015 to 2024, Austin added 120,000 units to its housing stock—an increase of 30%, more than three times the overall rate of growth in the United States (9%).

Rents fell. In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346). By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the U.S. overall ($1,353). This decline occurred even though the city population grew by 18,000 residents from 2022 to 2024. In apartment buildings with 50 or more units, rents fell 7% from 2023 to 2024 alone—the steepest decline recorded in any large metropolitan area. Rents declined about 11% in older non-luxury buildings that cater to lower-income renters, known as Class C buildings.

Austin’s success serves as an important example of how regulatory barriers to building more housing are often varied and interconnected. No single solution can solve a housing shortage, but Austin has taken multiple steps that have helped to unlock large amounts of housing supply in its market and reverse rent growth, including rent for tenants of lower-cost, older apartments. The city continues to take forward-looking steps—among them reforming building codes, streamlining permitting, and facilitating the construction of small apartment buildings—to reduce housing underproduction and improve affordability for existing and future residents.

Austin’s regulatory reform efforts have focused on both new supply and affordability

Over the past two decades, Austin has made myriad changes designed to encourage more housing. These include opening more areas to more types of homes, such as mixed-use buildings and accessory dwelling units (ADUs)—small homes usually located in a basement, backyard, or garage—as well as allowing taller buildings with more units and reducing parking requirements in certain neighborhoods. The reforms include:

Mixed use. In 2007, the city created a new zoning category, Vertical Mixed Use (VMU), which relaxed mandates for projects that met requirements related to building-design quality, eco-friendliness, and other features that the city wanted to incorporate. VMU zoning incentivized construction by allowing more units per site and reducing minimum parking requirements by 60%. As of February 2024, more than 17,600 units either were built or were in the process of being built in VMU-zoned areas. Both market-rate and income-restricted homes are allowed under VMU; most of those built were market rate. **Targeted rezoning. **The city strategically modified zoning rules in certain neighborhoods and sites targeted for growth. These areas, including downtown Austin and neighborhoods near the University of Texas at Austin, have added substantial numbers of units through density bonus programs, which increase maximum building heights if developments include income-restricted units. These programs, adopted over the past two decades, have added more market-rate and affordable homes. ADUs. In 2015, the city amended its land development code to ease regulations for ADUs by reducing the minimum lot size from 7,000 to 5,750 square feet, removing the requirement for a second driveway, and reducing the number of required parking spaces from two to one. Because of these changes, ADUs, which previously were allowed on only a minority of single-family lots, are now permitted on the vast majority of them. From 2015 to 2024, Austin permitted 2,850 new ADUs, or more than 250 annually—nearly four times the rate of new ADU permits from 2010 to 2014. Parking. In 2023, Austin removed minimum parking requirements for nearly every kind of property citywide. Austin remains the largest city in the country to enact this change.

A key piece of Austin’s strategy has been to encourage the construction of affordable housing. The city pursued this goal through density bonuses—allowing taller buildings with more units when they include income-restricted units—and bond levies to build more affordable homes. In 2018, for example, city voters approved a $250 million bond measure to support the construction of affordable housing. A year later, the City Council approved a program called Affordability Unlocked that eased building height and unit number restrictions, parking requirements, and other development regulations for projects in which at least 50% of units are income-restricted.

Austin’s commitment to subsidizing affordable housing development allowed the city to lead the country in affordable housing construction in 2024. Austin has implemented several policies in recent years that facilitated the building of 4,605 affordable housing units, more than double the number built in 2023. The policies included:

Density bonuses. The University Neighborhood Overlay (UNO) program, a density bonus initiative targeting the area adjacent to the University of Texas at Austin, was first passed in 2004 and was updated in 2014 and 2019. Currently, building height maximums in the UNO range from 60 feet (in the Dobie area) to 300 feet (in the inner West Campus area). Since program implementation, the UNO has led to the development of more than 572 income-restricted units and more than 911 beds. A similar initiative, the Downtown Density Bonus Program (DDBP), was first passed in 2014. For projects that meet program requirements, including reserving at least 50% of units for affordable housing, restrictions are eased to allow building heights ranging from 90 feet to more than 400 feet, with restrictions on floor-to-area ratios (a building’s combined floor area versus the size of its lot) ranging from 3-to-1 to 25-to-1. In 2025, building heights in the DDBP were capped at 350 feet. In 2024, Austin implemented a density bonus program via an Equitable Transit-Oriented Development Density Bonus District that eased restrictions to allow buildings up to 90 feet in height if income-restricted housing is included. Municipal bonds. The city has also committed hundreds of millions of bond dollars toward affordable housing, with many measures receiving overwhelming local support. For example, in 2022, Austin taxpayers approved a $350 million bond measure that passed with 71% of the vote, and funds are nearly fully committed. Bond funds will go toward buying land and building homes, or repairing homes already occupied by low-income residents. This bond measure follows a similar $250 million measure that was passed in 2018 and whose funds have been nearly depleted.

Austin rents decrease while affordability improves

Austin city and metropolitan-area construction has surged since 2015, helping to make the Texas capital one of the only major cities where rent has fallen since the pandemic. Asking rents decreased 4% in both the city and the surrounding suburbs from 2021 to 2025. In real terms, inflation-adjusted rents in the city of Austin fell 19% from the 2021 average to the 2025 average. This trend contrasts favorably with the national rent growth of 10% and the 6% increase in high-growth Texas.