Townhouse Market Share Weakening with Drop in First-Time Buyers

May 21, 2014

Total townhouse construction declined on a year-over-year basis during the first quarter of 2014.

According to NAHB analysis of Census data of Starts and Completions by Purpose and Design, single-family attached starts totaled 13,000 for the quarter, compared to 15,000 during the first quarter of 2013. Over the last four quarters, townhouse construction starts totaled 66,000, down from the 72,000 total for the four quarters prior to this period.

Using a one-year moving average, the market share of townhouses now stands at 10.7% of all single-family starts, effectively unchanged from 11.1% for the prior quarter.

Townhouse_May 14

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years – with occasional ups and downs. For example, recent weakness in production may be associated with reduced levels of first-time homebuyers.

Nonetheless, the prospects for townhouse construction over the long run are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


Townhouse Construction at the End of 2013

February 24, 2014

Total townhouse construction declined slightly on a year-over-year basis during the final quarter of 2013, per Census data of Starts and Completions by Purpose and Design.

Single-family attached starts totaled 17,000 for the quarter, compared to 18,000 during the last quarter of 2012. Over the course of 2013, townhouse construction starts totaled 68,000, just slightly higher than the 67,000 total for 2012.

Using a one-year moving average, the market share of townhouses now stands at 11% of all single-family starts, down from 11.6% for the prior quarter. The current market share is down significantly from the first quarter of 2013 (12.7%). The market share has dipped in recent quarters as the rest of the single-family market has expanded.

townhouse_4q13

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years – with occasional ups and downs. For example, the market share may decline in the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers.

Nonetheless, the prospects for townhouse construction over the long run are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


Townhouse Market Share Drops

January 7, 2014

Total townhouse construction declined slightly on a year-over-year basis during the third quarter of 2013, per Census data of Starts and Completions by Purpose and Design.

Single-family attached starts totaled 17,000 for the quarter, compared to 21,000 during the third quarter of 2012. Over the period spanning the fourth quarter of 2012 through the end of the third quarter of 2013, 69,000 townhouses began construction.

Using a one-year moving average, the market share of townhouses now stands at 11.6% of all single-family starts, down from 12.1% for the third quarter of 2012. The current market share is down significantly from the second quarter of 2013 (12.5%).

townhouse_3q_13

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. For example, the market share may be on the decline for the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers.

Nonetheless, the prospects for townhouse construction over the long run are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


Townhouse Construction Market Share

August 26, 2013

Total townhouse construction increased slightly on a year-over-year basis during the second quarter of 2013, per Census data of Starts and Completions by Purpose and Design.

Single-family attached starts totaled 19,000 for the quarter, compared to 18,000 during the second quarter of 2012. Over the period spanning the third quarter of 2012 through the end of the second quarter of 2013, 73,000 townhouses began construction.

Using a one-year moving average, the market share of townhouses now stands at 12.5% of all single-family starts, up from 11.2% for the second quarter of 2012. However, this share is down slightly from the first quarter of 2013, which set a post-recession cycle high of 12.7%.

 

townhouse_q2_13

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. For example, the market share may dip somewhat in the near term, given the ongoing rebound in the overall single-family construction sector.

Nonetheless, the prospects for townhouse construction are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


Townhouse Market Share Rises at Start of 2013

May 28, 2013

For the fourth consecutive quarter, construction of attached single-family housing (townhouses) increased both in terms of market share and year-over-year total units started.

Per first quarter 2013 Census data of Starts and Completions by Purpose and Design, total townhouse construction continued to grow at the beginning of year, reaching a starts total and market share last seen in 2009.

Townhouse construction starts totaled 15,000 for the quarter, a significant increase compared to 10,000 in the first quarter of 2012. Over the period spanning the second quarter of 2012 through the end of the first quarter of 2013, 72,000 townhouses were started.

Using a one-year moving average, the market share of townhouses now stands at 12.7% of all single-family starts, up from 10.4% for the first quarter of 2012.

townhouse_1q13

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share since the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. We may be approaching a dip in market share given the rise in single-family detached starts.

Nonetheless, the prospects for townhouse construction are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


Townhouse Starts and Market Share Grow During Third Quarter

November 26, 2012

For the third consecutive quarter, construction of attached single-family housing (townhouses) increased both in terms of total units and market share.

Per third quarter 2012 Census data of Starts and Completions by Purpose and Design, total townhouse construction has increased significantly in 2012, reaching a starts total and market share last seen in 2008.

Quarterly construction of townhouses rose from 12,000 starts in the third quarter of 2011 to 21,000 starts during the same period of 2012. Using a one-year moving average, the market share of townhouses now stands at 12.1% of all single-family starts, up from 11.2% for the second quarter of 2012.

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This peak was set after a fairly consistent increase in share since the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years. The prospects for the townhouses are positive given large numbers of homebuyers looking for medium density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.


After Recession Dip, Townhouse Construction Moving Along Increasing Trend

September 10, 2012

Construction of attached single-family housing (townhouses) is increasing both in terms of total units and market share.

Per second quarter 2012 Census data of Starts and Completions by Purpose and Design, total townhouse construction increased significantly in recent months, matching a post-Great Recession high set during the homebuyer tax credit period. However, market share remains lower than in past years.

Quarterly starts of townhouses rose from 11,000 starts in the second quarter of 2011 to 17,000 starts during the same period of 2012. Using a one-year moving average, the market share of townhouses now stands at 11% of all single-family starts, up from 10.4% for the first quarter of 2012.

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This peak was set after a fairly consistent increase in share since the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years. The prospects for the townhouses are positive given larger numbers of homebuyers looking for medium density environments and urban villages that offer walkable environments and other amenities.

*Data note: In previous posts on this topic, I calculated the market share in terms of new home sales. We will now calculate the share in terms of all single-family starts and on an annual moving average basis.


Townhouse Market Share Growing Off Recent Lows

May 2, 2012

When we last reported on townhouse construction (attached single-family housing), townhouses had reached a decade low in terms of share of the total single-family construction market. We expected this short-run decline to end and the share of construction for townhouses to rise to its historically increasing long-run trend.

Census data from the fourth quarter of 2011 suggests that this is happening. While the nominal rate of construction of attached single-family starts remains low, 13,000 at seasonally adjusted annual rates for the end of 2011, townhouse construction increased in each quarter of last year.

Moreover, the share of single-family starts consisting of townhouses now stands at 20%. This level was last experienced briefly at the end of 2010 (related to total starts declines at the end of the homebuyer tax credit program) and was last exceeded at the end of 2008.

The Great Recession interrupted the increasing long-run trend for townhouse construction. From 1990 to 2007, the share of townhouses constructed grew from 11% to 20% of single-family housing starts, as reported by the Census Bureau. Recent increases in market share suggest a return to this long-run trend.

This path is likely to hold, as increasing numbers of homebuyers seek higher density and inner suburb locations.

Regionally, townhouses retain a larger share in markets in the Northeast. At the beginning of 2008, townhouses were 21% of single-family starts. As of the end of 2011, that share had increased to 27%. A slight increase in concentration has also been seen in the Midwest, where the market share over the same period increased from 11% of single-family starts to 15%.

On the other hand, a small decline was seen in the South, where the share fell from 14% to 12% from the beginning of 2008 to the end of 2011. Nonetheless, as the South remains the largest home building region, the absolute number of townhouses started remains highest in the South at about 6,000 units for the final quarter of 2011 (compared to 2,000 in the West and 3,000 in the Northeast and Midwest respectively).

The largest market share decline was in the West, where the townhouse share fell from 21% at the beginning of 2008 to 11% at the end of 2011.