Texas’ housing market fell slightly in February as supply constraints continued pushing downward on the market, and mortgage rates increased. February sales and active listings were both down, resulting in an inventory level of about one month. Housing starts rose despite the continued surge in building material prices and dip in permits. The greatest challenge remains for homes in the lower price cohorts, as supply still has not caught up to the unprecedented demand. The state’s diverse and expanding economy, favorable business policies, and steady population growth, however, support a favorable outlook.