Year-over-Year Gains for Townhouse Construction


According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction in the third quarter of 2021 continued to show year-over-year construction increases. As housing demand has shifted to more suburban and exurban areas and housing affordability headwinds persist, medium-density construction lagged for much of 2020. However, demand for medium density neighborhoods is now returning as the economy reopens.

During the third quarter of 2021, single-family attached starts totaled 35,000, which is 16.7% higher than the third quarter of 2020. Over the last four quarters, townhouse construction starts totaled 143,000 units, 38% higher than the prior four quarter total (104,000).

Using a one-year moving average, the market share of new townhouses increased to 12.6% of all single-family starts. This represents a rebound after recent declines.

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.

Despite relative weakness in 2020, 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.

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