According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, after a strong 2018, townhouse construction experienced weakness over the course of 2019. This recent market softness matches data in the NAHB HBGI, which revealed reduced construction activity for large metro suburban markets in 2019. These kind of higher density neighborhoods are often places where townhouses are constructed.
Nonetheless, townhouse construction is set for expansion in 2020 given the demographics of renters entering the for-sale market, as well as ongoing land constraints and the growth of demand for walkable neighborhoods.
Over the course of 2019, townhouse construction starts totaled 109,000 units, 9% lower than the 2018 total. During the final quarter of 2019, single-family attached starts came in at 24,000, which was lower than the final quarter of 2018 (26,000).
Using a one-year moving average, the market share of new townhouses fell to 12.2% of all single-family starts, off recent post-recession highs.
The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when the percentage 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 market 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.