More townhomes are being built
According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, townhouse construction posted outperformed other building sectors over the course of 2018. However, like other submarkets, townhouse construction softened during the fourth quarter. Nonetheless, townhouse construction is set for further expansion 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 2018, townhouse starts totaled 119,000, 14% higher than in 2017. In fact, this more than five times the growth rate of the overall single-family construction sector in 2018.
Townhouses, or single-family attached housing, accounted for 25,000 starts during the final quarter of 2018, although this was lower than the 29,000 total for the final quarter of 2017. Using a one-year moving average, the market share of new townhouses stands at 13.8% of all single-family starts, near a post-recession high.
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 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.