Townhouse Construction Surged in 2021

Economics
Published

Townhouse construction jumped 28.1% in 2021, according to NAHB analysis of the most recent Census data. Medium-density construction lagged for much of 2020, with persistent affordability headwinds, and housing demand shifting to more suburban and exurban areas.

However, demand for medium-density neighborhoods returned as the economy more fully reopened during the past year.

During the fourth quarter of 2021, single-family attached starts totaled 39,000, which was 11.4% higher than the final quarter of 2020.

Over the last four quarters, townhouse construction starts totaled 146,000 units — 28% higher than the prior four-quarter total (114,000).

Using a one-year moving average, the market share of new townhouses increased to 13% of all single-family starts. This represents a rebound after recent declines.

Despite relative weakness in 2020, the long-run prospects for townhouse construction remain positive, given the growing numbers of home buyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities. This will be particularly true for prospective first-time buyers in high-cost metro areas.

NAHB Chief Economist Robert Dietz provides more in this Eye on Housing post.

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