Townhouse Construction Slows at Start of 2019

Filed in Economics by on May 17, 2019 0 Comments

Townhouse construction slowed during the first quarter of 2019 after a strong 2018 performance, according to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design.

But as NAHB Chief Economist Robert Dietz notes in this Eye on Housing blog post, 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 120,000, 15% higher than 2017. However, townhouses, or single-family attached housing, accounted for just 21,000 starts during the first quarter of 2019. This was lower than the 24,000 total for the first quarter of 2018. However, over the last four quarters, townhouse construction has posted a 11% gain. Using a one-year moving average, the market share of new townhouses stands at 13.4% of all single-family starts, off 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 home buyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.

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