Townhouse Market Expanded in 2014

Townhouse construction grew during 2014.

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, single-family attached starts totaled 19,000 for the fourth quarter of 2014, 12% higher than a year prior. Over the course of 2014, townhouse construction starts totaled 72,000, up slightly from the 68,000 starts total of 2013.

Using a one-year moving average, the market share of townhouses now stands at 12% of all single-family starts, the highest share since the end of 2012.

townhouse_4q14

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 the share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, the share for townhouse construction is expected to increase in coming years – with occasional ups and downs. For example, recent weakness in production has been associated with reduced levels of first-time homebuyers.

For geography concerning the existing townhouse market, see this post by the NAR Economics team on market confidence for existing townhouses by state.

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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