April 21, 2018

Townhome Construction Faces Setback

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Townhome Construction Faces Setback

Many in the real estate market are looking to the townhome market to help fill the demand for greater entry-level homes for buyers. But the wait will be longer.

Townhouse construction starts continued to increase on a year-over-year basis, but the growth rate has showed signs of slowing recently, according to an analysis by the National Association of Home Builders.

Townhouse starts totaled 98,000 in the fourth quarter of 2016, a 4 percent increase year over year. For the start of 2017, however, single-family attached starts totaled 23,000. Until recently, townhouse construction had been outpacing the growth rates of single-family starts.

For the fourth quarter of 2016, the market share of new townhomes was 12.4 percent of all single-family starts, which is close to a cycle high, the NAHB reports. The peak market share for townhouse construction was 14.6 percent of total single-family construction, reached in the first quarter of 2008.

Still, “the long-run prospects for townhouse construction are positive given the large numbers of home buyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities,” writes Robert Dietz, the NAHB’s chief economist, at the builder trade group’s Eye on Housing blog.

Source: “Townhouse Construction Growth Slowed at Start of 2017,” National Association of Home Builders’ Eye on Housing blog (May 18, 2017)