Townhouse Market Softens With Fewer First-Time Buyers

May 23, 2014

Townhouse construction continues to slow, which likely is due to weakening demand from first-time home buyers, a segment of buyers who are typically are drawn to such housing units, according to a new analysis by the National Association of Home Builders.

Single-family attached starts totaled 13,000 in the first quarter, down from 15,000 a year ago. Over the last four quarters, townhouse construction starts totaled 66,000, down from 72,000 in the previous four quarters.

Townhouses hit a boom in the first quarter of 2008, when it reached a 14.6 percent market share of all single-family starts. Today, the market share for townhomes stands at 10.7 percent of all single-family starts.

“Despite the drop in market share during the Great Recession, the share for townhouse construction [will likely] increase in the coming years – with occasional ups and downs,” according to NAHB’s Eye on Housing blog. “For example, recent weakness in production may be associated with reduced levels of first-time home buyers.”

NAHB says that townhouse construction prospects are positive given a large number of buyers who say they are looking for medium density residential neighborhoods, such as urban villages that offer walkability.

Source: “Townhouse Market Share Weakening with Drop in First-Time Buyers,” National Association of Home Builders’ Eye on Housing blog (May 21, 2014)

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