Townhouse Market Share Drops

Total townhouse construction declined slightly on a year-over-year basis during the third quarter of 2013, per Census data of Starts and Completions by Purpose and Design.

Single-family attached starts totaled 17,000 for the quarter, compared to 21,000 during the third quarter of 2012. Over the period spanning the fourth quarter of 2012 through the end of the third quarter of 2013, 69,000 townhouses began construction.

Using a one-year moving average, the market share of townhouses now stands at 11.6% of all single-family starts, down from 12.1% for the third quarter of 2012. The current market share is down significantly from the second quarter of 2013 (12.5%).

townhouse_3q_13

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 beginning in 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 occasional ups and downs. For example, the market share may be on the decline for the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers.

Nonetheless, the prospects for townhouse construction over the long run are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.



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