Mortgage Watch | December 10, 2018

Townhome construction on the rise nationwide:

Supply and demand are always a sticky wicket in real estate, especially in the new homes arena. Housing demand continues to outpace supply, and nowhere is that more keenly felt that in the entry-level category. Because of it, pressure has increased on builders to deal with the ongoing high cost of land, materials and labor cuts into profitability by building more attached and semi-attached housing, such as townhomes.

According to the National Association of Home Builders (NAHB), townhouse construction is increasing and is anticipated to grow in the coming years. According to a recent article in BUILDER Magazine’s online entity, from the third quarter of 2017 to the third quarter of 2018, townhouse construction starts totaled 123,000, which is 24 percent higher than the previous four quarters. The market share of new townhouses is now 1.8 percent of all single-family house starts, the highest share since the recession. The peak market share over the past two decades was during the first quarter of 2008 when 14.6 percent of all single-family house starts were townhouses.

The NAHB goes on to report, “On a one-year moving average, new townhouses make up 13.8% of all single-family starts. This marks the highest share of townhome starts since before the recession. The last peak market share was set in Q1 2008 at 14.6% of all single-family homes built.” They add that townhouse construction is likely to expand because of the large first-time buyer market looking for walkable neighborhoods and more city-close locations.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market improved by +40bps. This was enough to move rates lower last week. We saw moderate to high rate volatility last week.

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 40 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele, as they continue to offer personal service with an emphasis on achieving his clients' real estate goals. This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 20 years.