Townhouse Construction Starts Changed Little in Q2

According to the US Census Bureau’s Starts and Completions by Purpose and Design, with additional analysis provided by the National Association of Home Builders (NAHB), single-family attached starts totaled 38,000 during 2023Q2, which is relatively unchanged when compared to 2022Q2. However, over the last four quarters, townhouse construction starts totaled 141,000—almost 5% lower than the previous four-quarter period.

The NAHB notes that when using a one-year moving average, the market share of newly built townhouses stood at 16.1% of all single-family starts in Q2. Following a strong 2022, townhouse construction cooled at the start of the year, continuing its trend of lagging behind the broader home building market by a quarter or two. Nonetheless, the four-quarter moving average market share is the highest since 1985.

Prior to the current cycle, the peak market share in the past two decades for townhouse construction was set during 2008Q1 when the percentage reached 14.6% on a one-year moving basis. This high followed consistent increases in the share of townhouses since the beginning of the 1990’s.

The NAHB concludes that 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 environment and other amenities.