Townhouse construction was back on the rise in 2014 as homebuyers again showed an increasing appetite for this type of housing.

Single-family attached starts totaled 19,000 in the fourth quarter of 2014 – 12 percent higher than a year prior, according to Census data. For all of 2014, townhouse construction starts totaled 72,000, up from 68,000 starts in 2013.

Townhouses make up a 12 percent share of all single-family starts. Townhouse construction peaked during the first quarter of 2008 when it reached 14.6 percent.

During the recent recession, the townhome market plunged, particularly as the number of first-time homebuyers fled the market. But as the number of first-time homebuyers rebounds, construction of townhouses is expected to rise again too.

“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,” writes Robert Dietz, an economist for the National Association of Home Builders on NAHB’s Eye on Housing blog.

Realtors® are upbeat about townhome prospects in the District of Columbia, North Dakota, Colorado, Texas, California, Florida, Hawaii and Alaska, according to the December 2014 Realtors Confidence Index Survey.

However, Realtors continue to be concerned about the condo market overall, reporting that obtaining Federal Housing Administration (FHA) financing for condos remains a big hurdle for homebuyers because many condos still don’t meet FHA eligibility criteria.

Nationwide, existing condo and co-op sales fell 3.5 percent on a seasonally adjusted annual rate in January; they remain 1.8 percent below year ago levels, the National Association of Realtors reported in its latest housing report.

“Condominiums offer an affordable option and are the first step to homeownership for many homebuyers,” says NAR President Chris Polychron. “NAR has urged FHA to develop policies that will give buyers access to more flexible and affordable financing opportunities and a wider choice of approved condo developments.”

NAR has a heat map posted online that shows each state’s Confidence Index for future townhouse sales.

Source: “Townhouse Market Expanded in 2014,” National Association of Home Builders’ Eye on Housing blog (Feb. 23, 2015) and “States with Strong Townhouses and Condos Market,” National Association of REALTORS® Economists’ Outlook blog (Feb. 10, 2015)