Townhouse Construction Expands

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction starts continue to post gains.

Over the course of 2017, townhouse starts totaled 104,000, 7% higher than 2016. Townhouses, or single-family attached housing, accounted for 29,000 starts during the fourth quarter of 2017, 21% higher than the total during the fourth quarter of 2016.

Using a one-year moving average, the market share of new townhouses stands at 12.4% of all single-family starts. After a soft patch, the market share is rising again. I expect future gains as townhouses are a useful bridge from rentership from homeownership for younger prospective home buyers in high cost markets, among other market opportunities.

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

The share for townhouse construction is expected to increase in coming years – with occasional ups and downs. The long-run prospects for townhouse construction 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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