As home prices soar and inventory stays tight, a growing number of buyers are rethinking what homeownership looks like for them. Enter the townhome: compact, stylish, and increasingly the key to getting into new home construction without breaking the bank.
Why it Matters: As single-family homes grow out of financial reach, townhomes are stepping up as a smart alternative for buyers who want less hassle, more flexibility, and a home that’s obtainable right now.
Townhomes Rise in Popularity
Homebuilders are going smaller, but smarter. Townhomes currently lead new-home construction starts, hitting their highest share since 2008, according to NAHB.
“The difference is that in 2008, home prices were crashing... today, home prices have increased too high,” said Jeff Benach, principal at Lexington Homes.
“Today, with such little inventory on the market, prices of new homes have increased to the point where single-family homes are now out of range for many.”
What’s Driving the Appeal of Townhomes:
Townhomes appeal to a wide range of buyers looking for value and convenience. The allure of these homes exists for first-time buyers, single women, busy professionals, and retirees who want less upkeep without sacrificing comfort or location. Some appeal factors include:
1. Affordability
“New townhome product is often priced well below single family homes, appealing to first time buyers that cannot afford a new detached home,” said Shaun McCutcheon, vice president, advisory, of Zonda. “It is common for a new townhome in a given location to be priced under $400,000 while a similar single-family home would be priced at $500,000 or $600,000.”
2. Low maintenance
HOA fees typically cover landscaping, snow removal, and upkeep of shared areas.
“Maintenance-free living saves townhome owners time, space, and money as they don’t need to invest or store landscape equipment,” said Benach.
3. Prime locations
Townhomes are popping up in mixed-use, walkable neighborhoods that offer easy access to retail, dining, and offices.
“Buyers are prioritizing location, walkability, and lifestyle,” said Caroline Simmel, senior vice president of sales and marketing, of Empire Communities.
4. Smart use of space
Even with smaller footprints, thoughtful designs like extra storage, open layouts, and community green spaces lets townhome owners live large.
“It’s not just about density. It’s about smart growth that aligns with how people want to live,” said Bryan Havel, division president of Tri Pointe Homes Austin.
What’s New in Townhomes in 2025
Modern townhomes are shedding their cookie-cutter image. Builders are offering:
• Two-car garages
• Open floor plans
• Main-floor primary suites, ideal for aging in place
• Strong soundproofing between units
“They offer a high level of design and comfort. Just with a smaller footprint and a simpler way of living,” says Havel.
“With the codes as they are in most parts of the country now, sound attenuation between units is so good that you generally cannot hear neighbors on either side,” said Benach.
The Challenges Facing Townhomes
Zoning remains a roadblock. In many areas, regulations still favor detached homes or multifamily units over “missing middle” options such as townhomes.
“Some cities may not have zoning that easily accommodates attached product,” says Havel.
“Zoning, which varies widely between municipalities, doesn’t always accommodate the ‘missing middle’ housing types that townhomes represent. In some areas, local codes still heavily favor detached single-family homes or multifamily buildings,” said Caroline Simmel, senior vice president of sales and marketing at Empire Communities.
Builders are adapting with creative designs, such as rear-loaded garages. Changing the door location creates softened streetscapes to meet local requirements and aesthetic goals.
The Bottom Line and The Future of Townhomes:
Townhomes are unlikely to replace single-family homes, but their role is expanding.
“As preferences shift toward convenience and connectivity, the demand for townhomes will likely outpace that for larger, more isolated housing types,” said Simmel.
“Townhomes allow us to meet expectations in a way that’s both sustainable and scalable,” added Havel.
Benach believes there will eventually be a shift back to single-family homes once prices cool and interest rates drop. But for now, townhomes are having their moment.
Reporting by Leah Draffen
Follow NewHomeSource on Instagram
