Townhouse Market Share Remains At Post-Recession Highs

For the fourth consecutive quarter, construction of attached single-family housing (townhouses) increased both in terms of  market share and year-over-year total units built.

Per fourth quarter 2012 Census data of Starts and Completions by Purpose and Design, total townhouse construction  increased significantly in 2012, reaching a starts total and market share last seen in 2008. Townhouse construction totaled 66,000 for the year.

Quarterly construction of townhouses rose from 13,000 starts in the fourth quarter of 2011 to 17,000 starts during the same period of 2012. Using a one-year moving average, the market share of townhouses now stands at 12.2% of all single-family starts, up from 10.5% for the final quarter of 2011.

townhouse_1st qtr

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share since the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with the occasional ups and downs. The prospects for the townhouses are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.

0 replies

  1. I don’t see the increase in townhouse construction as a positive. In 2008, townhouses were hot because land prices where through he roof and prices were bid up so high, they were extremely profitable. Today, they are hot because the market is pretty much limited to first-time buyers who cannot afford big, detached homes. I think you can look for this trend to continue until appreciation returns to existing real estate.

    • Thanks for the comment. I would argue that the first-time buyer share is lower than historical averages because access to mortgage credit is particularly tight for younger buyers. That bodes well for townhouse construction in the future as pent up demand is unlocked. And I take your point about positive/negative for the overall market, although a growing share is good for townhouse builders…


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