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As things stand, the Rockets are 28th in the NBA in points allowed per game at 102.3, which is an insanely high number to allow. On the surface, this may look like a defensive trainwreck, but it is not as bad as it seems.
Houston plays with the fastest pace out of any team in the NBA, so all of its numbers appear inflated. If instead we look at Houston's opposing field-goal percentage, it ranks 18th. If you adjust for pace, Houston's Defensive Efficiency pushes it up to 17th in the NBA.
82games.com's opposing PER numbers appear to show a big part of the problem. Looking at PER of the team versus PER against, it becomes very clear where the problem is.
||PER Against ||Difference
|SG ||22.1 ||14.4 ||+7.7
|SF ||15.4 ||15.1 ||+0.3
|PF ||13.6 ||17.3 ||-3.7
|C ||16.3 ||17.0 ||-0.7
Looking at the chart, it becomes clear that there are two big holes. First is at point guard, where Jeremy Lin plays average but gives up above-average production. Part of this is just that there are so many great point guards in the league today, the average production is up.
The more glaring weakness, however, is in the frontcourt. Omer Asik puts up a good PER but allows a better one. The power forward position is the biggest issue by far. The Rockets run out a plethora of average players at power forward, and this will likely be resolved this offseason. If production goes up at the 4, it will help with Omer Asik's opposing numbers.
So even though this team is average now, it has the potential to improve greatly.