According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction declined during the third quarter. As housing demand has shifted to more suburban and exurban areas and housing affordability headwinds persist, medium-density construction has lagged.
During the third quarter of 2020, single-family attached starts totaled 31,000, which was 3% lower than the third quarter of 2019 (32,000). Over the last four quarters, townhouse construction starts totaled 105,000 units, 5% lower than the prior four quarter total (111,000).
Using a one-year moving average, the market share of new townhouses fell to 11% 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.
Over the near-term, townhouse construction is likely to lag the overall building market, as telecommuting allows people to live further from urban cores in less dense neighborhoods.
However, 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.