According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction declined during a challenging second quarter. The sector was also relatively weaker than the overall building market. As housing demand has shifted to more suburban and exurban areas, and housing affordability headwinds persist, medium-density construction has lagged.
During the second quarter of 2020, single-family attached starts totaled 26,000, which was 16% lower than the second quarter of 2019 (31,000). Total single-family starts declined 10% when comparing the second quarter of 2020 to the second quarter of 2019. Over the last four quarters, townhouse construction starts totaled 106,000 units, 6% lower than the prior four quarter total (112,000).
Using a one-year moving average, the market share of new townhouses fell to just under 12% of all single-family starts.
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 trend higher in coming years – with occasional ups and downs. The long-run prospects for townhouse construction remain positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities, while seeking to avoid high-density communities that depend on mass transit and elevators in the wake of the virus-related lockdowns of the spring of 2020.