Why Builders, Buyers Are Favoring Townhomes

Rising costs are making townhomes more attractive—not just for builders, but for buyers as well. Townhome construction has grown over the last year, making up nearly 13% of all single-family starts, an increase of 38% in one year, BUILDER reports.

Robert Dietz, the chief economist of the National Association of Home Builders, is bullish on townhome growth, believing they could comprise more than 15% of all single-family home starts over the coming years. That would put townhome construction at a record high.

“Many builders are turning to this product, as the price point for sale is lower, and it allows them to build more units,” Brian Lawrence, vice president, and relationship manager at Univest Bank and Trust Co., told BUILDER. “Profit on the project increases with increased density.”

Another building perk of townhomes is they can be constructed and made operational faster than rental housing options. Townhomes also tend to offer buyers a lower-cost alternative for housing in the current environment of ever-rising prices. They also may prove an important alternative for baby boomers, who may be looking to downsize into a smaller home that is easier to manage, housing experts say.

“Prices of homes have increased across the board,” Lawrence told BUILDER. “Townhomes are becoming the starter home in most markets. With inflation and the rising costs of homes, all existing supply of single-family homes has been purchased. It’s a seller’s market, and developers are rushing to finish projects to meet the high demand for housing.”

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