Townhouse Construction Surged in 2021

According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction jumped 28.1% in 2021. 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 returned as the economy more fully reopened during the past year.

During the fourth quarter of 2021, single-family attached starts totaled 39,000, which is 11.4% higher than the final quarter of 2020. Over the last four quarters, townhouse construction starts totaled 146,000 units, 28% higher than the prior four quarter total (114,000).

Using a one-year moving average, the market share of new townhouses increased to 13% 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%, on a one-year moving average basis, of total single-family construction. This high point was set after a fairly consistent increase in the share beginning in the early 1990s. The fourth quarter 2021 quarterly market share of 14.7% was the highest since the start of 2008.

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. This will be particularly true for prospective first-time buyers in high cost metro areas.

Discover more from Eye On Housing

Subscribe to get the latest posts to your email.

Leave a Reply