The Scot has been without a managerial job since leaving Wigan in December 2013, but looks set to take over at the MLS side.
Dominic Kinnear resigned as Dynamo coach in October before being announced as the San Jose Earthquakes' new boss.
Coyle told the Houston Chronicle there was nothing to confirm, but said he was in the city for talks.
"We're going to have a chat again and see where we go from there," Coyle said.
"There's nothing, as they say, confirmed in any respect. But there's no getting away that it's a wonderful opportunity for a coach to come into a wonderful club and try to move things on."
The Dynamo finished eighth in the Eastern Conference in 2014, winning just 11 of their 34 matches.
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